Tarin denies leveraging US military cooperation to win IMF concessions

ISLAMABAD: Finance Minister Shaukat Tarin rebutted on Thursday a story suggesting military cooperation with the United States over its withdrawal from Afghanistan had given the government “some space” to delay unpopular International Monetary Fund reforms.

Islamabad is in talks with the Fund to release the next tranche of funding as part of a $6bn loan programme as the government struggles to tame inflation and recover from the shock of the pandemic.

The report in Financial Times suggested that Islamabad is seeking US support in the form of financial backing from the Washington-based international financial institution in exchange for helping President Joe Biden withdraw all US troops by September 11 and bringing the Taliban to the negotiating table.

“Let me clarify. It was an hour-long interview [with the publication] based on some 19 points […] and there was just one mention of the US wherein the interviewer asked about Pakistan’s relations with America, to which, I responded that the US has earmarked some amount for our military training,” Tarin said during a press conference to present the Pakistan Economic Survey 2020-21.

“Besides, neither have they [US] reserved any other allocation nor do we want it.”

Quoting the minister, the report said the IMF had been receptive to the government’s request to hold off raising power tariffs and sales taxes that have hit the Covid-stricken people hard.

“What we do not need is more burden on our poor people,” Tarin told FT. “We have been talking to the American officials and they’re willing to help.”

During the presser, Tarin said he had just told the interviewer, Stephanie Findlay, that Washington had earmarked some amount for “our military training, and apart from that they didn’t make any other allocation, nor do we want it.”

He added that he had stated during the interview that Pakistan intended to do more business with the US, and was looking for investments in its oil, gas and IT sector. “That was all that I talked about the US [during the interview],” he clarified.

Tarin, who took office in April, returned to the post after negotiating an IMF bailout in 2008 when Pakistan-US cooperation was at its height.

“In 2008, we obviously had the US and everybody else on my right side because of the war on terror […] Today things are different,” the report quoted Tarin as saying.

Islamabad’s relationship with Washington deteriorated after the Trump administration cut $2bn in security aid in 2018, citing its “support” of the Taliban. Since then, however, Pakistan has played an important role in helping the US end its war in Afghanistan.

Jake Sullivan, the White House national security adviser, said this week that Washington and Islamabad have had “constructive discussions” about “the future of America’s capabilities”.

Tarin said the resumption of a US military training programme with Pakistan indicated that the relationship was warming. He also said the World Bank was expected to approve at least $800 million of new loans by the end of the month.

The government had made progress in addressing its financial challenges but the fallout from the pandemic and political turmoil risks derailing the reform agenda, said rating agency Fitch last month, holding its outlook on Pakistan stable at B-.

Islamabad has been able to access external funding in part because of its compliance with the IMF programme and its progress in addressing terrorist financing.

“As President Biden is withdrawing troops, Pakistan’s leverage on the US has improved,” said Asfandyar Mir, a South Asia analyst at Stanford University.

“The US is desperate for help with both the Afghan peace process and counterterrorism. It is left with no option but Pakistan.”

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