ISLAMABAD: Despite concentrated efforts to avoid the inclusion, Pakistan has officially been placed on the Financial Action Task Force (FATF) ‘grey list’ on Wednesday. Experts now believe that Pakistan should avoid going to the International Monitory Fund (IMF) for another bailout package as the lending agency question the country’s sources of foreign funding.
“It is very clear that the IMF, which is ready to facilitate another bailout package for Pakistan, will ask about all sources of foreign fundings including the ones coming through the China Pakistan Economic Corridor (CPEC) after Pakistan’s fall in the grey list,” Federal Board of Revenue (FBR) former chairman Dr Muhammad Irshad said. He added that the lending agency (IMF), which is influenced by those countries which put Islamabad on the grey list, will demand to share every detail about CPEC related investments and hence their legalities.
Unfortunately, for wrong policies of the previous government, Pakistan is fast heading towards another bailout package to meet the grave situation of current account deficits. Defaulting to foreign loans will be more destructive for the country. “This is why I suggest the government extend the existing amnesty scheme and provide more facilities to oversee Pakistanis convincing them to transfer assets to Pakistan. Let the Pakistani diaspora enjoy facilities even if undue. The country needed desperately needed dollars,” he said suggesting further, that a national economic agenda is needed to be framed on an emergency basis.
“As the previous government estimated around $5 billion revenue to be generated under the amnesty scheme, we need to let it continue for another few months to ensure more facilities for overseas Pakistanis. In case of better inflows, the country can sustain for more time without IMF’s support,” Dr Irshad added.
According to an official at Ministry of Finance (Mof), even after the decision of putting Pakistan in the grey list again, the country has the grace period of 12 to 15 months to come out of the list. “What Pakistan needed was to perform better diplomacy and convince at least five to seven countries and get favourable votes out of the total 37 countries before the next meeting of FATF. This time, even friendly countries avoided supporting Pakistan under the pressure of the India led lobby,” he said, adding that the country had once come out of the list in 2015, it can again leave the list if adequate measures are taken. Islamabad needed to ensure the implementation of the action plan shared with the FATF.
Talking about the option of extending the amnesty scheme to pave the way for repatriation of foreign assets, sources claim that people, enjoying the extended period may declare money/assets but thera e is little possibility to bring money back into Pakistan. They may declare assets inside and outside the country to whiten the black money.
Economists claim that the grey-listing will squeeze Pakistan’s economy and make it harder for the country to meet its mounting foreign financing needs, including potential future borrowings from the International Monetary Fund. It could also lead to a downgrade in Pakistan’s debt ratings, making it more difficult to tap into the international bond markets.
However, officials at the finance ministry claim Pakistan was on the FATF grey-list from 2012 to 2015, a period during which it successfully completed an IMF program and raised over $5 billion from the international bond markets. During this period Pakistan’s imports and exports remained stable, evidence that the grey-listing did not raise any significant barriers to trade.
“Though the economic team of Pakistan has also shown weaknesses in the entire process of meeting requirements of FATF, a lobby of Pakistan’s enemy may have also played a key role in the decision of putting Pakistan against on grey list,” sources.