ISLAMABAD: Just two days ahead of a key meeting of the IMF’s executive board, Pakistan’s federal government and the Khyber Pakhtunkhwa (KP) administration lashed out at each other after the northwestern province’s finance minister wrote to the Centre withdrawing from a commitment made with the global institution to revive a $6-billion (Pak Rs 1,32,000 crore) loan for the cash-starved nation.
Miftah Ismail, finance minister at the Centre, had on Friday blasted KP’s finance minister Taimur Khan Jhagra for “jeopardising” the IMF programme in the country.
Miftah is the finance minister under the Pakistan Muslim League government led by Prime Minister Shehbaz Sharif, while ousted PM Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) is in power in Khyber Pakhtunkhwa.
At a late-night presser on Friday, Miftah accused PTI leaders of putting the country’s future “at stake” at a time when it is reeling from flash floods that have killed nearly 1,000 people and affected more than 33 million others.
The IMF had put the release of a $1.7-billion (Pak Rs 37,400 crore) tranche — part of the $6-billion bailout package for Pakistan — on hold early this year over concerns about Islamabad’s compliance with a deal reached earlier for the credit line.
In its recent letter to the Centre, the KP government refused to implement a key IMF loan precondition for a surplus budget, claiming the provincial administration might find it difficult to run a surplus this year in view of the flood fury.
A “provincial surplus” is the amount provinces do not spend from the funds transferred to them by the federal government.
Jhagra, KP’s finance minister, had also hinted at forwarding his letter to the IMF. “Running a surplus would be next to impossible if the federal government didn’t resolve certain issues, such as budget allocations for former tribal districts which were merged into KP in 2018, monthly transfers of net hydel profits to province as per agreed terms and province’s shares in other areas,” the letter states.
Miftah called the letter PTI’s attempt to have the deal with the IMF cancelled. He claimed the letter had complicated matters for the government as the IMF, according to him, was expected to raise the issue with Islamabad in the upcoming meeting of its executive board on August 29.
Reacting to Miftah’s statement, former finance minister and senior PTI leader Asad Umar accused the Sharif-led coalition government of “trying to suppress voice of KP’s finance minister. “Taimur Jhagra is demanding the right of the province. The coalition government is trying to shift the blame of its failure to KP’s finance minister,” Umar said.
The IMF had inked a “staff-level” agreement with Islamabad on July 13, agreeing to release the urgently needed funds. The agreement, however, awaits approval of IMF’s executive board that is scheduled to meet on Monday.

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