IMF briefing on floods in Pakistan

Image via WikipediaTranscript of DOMINIQUE STRAUSS-KAHN MANAGING DIRECTOR, IMF AND ABDUL HAFEEZ SHAIKH FINANCE MINISTER, PAKISTAN

Washington, D.C.
Thursday, September 2, 2010
MR. STRAUSS-KAHN: The management and the staff had this morning the opportunity to meet with the finance minister and to see together what the IMF can do to help Pakistan face this very challenging situation created by the floods. We have two main directions for work: one is short-term help and the second thing is to deal with the economic consequences in the medium term of what has happened.
As far as the first one is concerned, I’m happy to announce that we will be able to provide 450 million in the coming days. And probably the IMF -- I won’t say as always, but as often -- will be the first agency likely to disburse very rapidly this money which is absolutely needed.
But that’s not the most important thing. The most important thing is to keep the Pakistani economy back on track. We had a successful program working before the floods and we need to go back to this program. And I’m very happy to hear from the minister that Pakistani authorities clearly have in mind to do so and to go on as much as possible, taking into account the new situation, of course, but to go back to the program we established together. And I think that’s very good news. It’s needed for the Pakistani economy and it’s also a very good signal for the international community to mobilize and be able to provide the needed resources.
So I think this meeting this morning was useful. And, of course, we’re going to go on working in the coming weeks on the new developments.
MR. SHAIKH: Thank you. Let me start by thanking the managing director for the support that IMF has provided, both in the framework for a standby arrangement as well as the emergency assistance.
I want to reaffirm the commitment of the government of Pakistan towards the economic reform program, which includes fiscal austerity; domestic resource mobilization; reform of governance structures, including public sector corporations; and an enabling environment for the private sector. We are committed to that program because that is the way to keep the recovery strong and to get back on the growth trajectory.
The IMF has been a partner and has provided critical support in allowing us to get back into a stabilization mode, and the emergency assistance that the managing director has offered will come in very handy at this time of great need. And because of its quick disbursing nature, I think it is particularly relevant for our situation. I want to thank the managing director personally and his team, including Mr. Portugal, Mr. Masood Ahmed, and Mr. Adnan Mazarei, who have been working with our team to try and develop a shared understanding of the macroeconomic framework as well as what the floods would mean in terms of the macroeconomic projections and going forward.
The floods, as you know, is perhaps the greatest calamity to have struck any country in recent times. Our country, its leadership, the president, the prime minister, and all of us are united in our resolve to respond to the situation by relying on our own resources and by seeking support from our international friends, and ensuring that that support is efficiently utilized for the prosperity of our people. And even in this time, while we undertake economic reforms which can bring hardships, we will continue with targeted programs for protecting the poor. We want to get back in a situation where we go beyond relief and rescue and to the reconstruction of lives, livelihood, and infrastructure.
The challenges are great, but I think today’s meeting is a sign of hope for us and we want to continue the work by getting back home as soon as we can.
SPEAKER: My question is to the minister. The IMF managing director has announced emergency assistance for Pakistan. How soon can it be sent to Pakistan given the urgent needs of flood victims?
MR. SHAIKH: Yes. Well, this is a very good question on how soon the emergency assistance will be disbursed. And I’m happy to note that unlike a lot of pledges which are made in these kind of situations and take a long time to materialize, the IMF emergency assistance will be committed formally and can be disbursed within a couple weeks or so.
SPEAKER: What’s the status of the aid?
MR. SHAIKH: Well, at the moment there are a variety of methods through which the pledges or commitments are being made. You have a UN appeal for $460 million for the early recovery period. That is likely to be fulfilled and there is a possibility of another appeal for the next phase. Many countries are donating bilaterally. The global institutions, like the World Bank and the Asian Development Bank combined, they have committed to $3 billion in terms of reorientation of the programs or making their assistance accelerated, you know, in terms of disbursement timing.
So it’s difficult to put a single number because there are a variety of channels, there are a variety of instruments. But we can share with you the details of all that through the Economic Affairs Division in our country.
SPEAKER: (inaudible) being made or is the IMF disbursement likely to be the first actually received?
MR. SHAIKH: Well, I think the IMF disbursement is qualitatively different in that it is a clear additionality as well. It is not simply a recycling of existing money. It’s a clear additionality, number one. And number two, it will be disbursed within weeks rather than within an unspecified period of time.
SPEAKER: Mr. Strauss-Kahn, has there been any relaxation of conditions in terms or timing of the $11 billion program?
MR. STRAUSS-KAHN: we’re discussing now how to reorganize the program owing to the new circumstances. What is important is what was decided by the government to improve the economic situation, especially in the tax sector, but in other fields, as well. I am happy that we’ve heard from the Pakistan Authorities that they really want to continue with this program.
Now we will see exactly how it looks during the review, how it looks for the money which already has been disbursed, and the other part of the program and what kind of timing we can have. That will be seen at the time of the review.
What is important today are two things: going on with the program rebuilding the Pakistani economy; and second, creating immediately a possibility for new resources. I’m very happy that the minister stressed the fact that that’s really new resources and not recycling of an existing loan. The new resources are going to be disbursed probably in the coming weeks, probably before the end of September. And I hope it will be helpful even if, of course, it’s not enough, especially when it will be targeted to actions which have to do with the most vulnerable part of the population in Pakistan.
SPEAKER: Thank you.

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