IMF Appoints Mahir Binici As New Head For Pakistan

Mahir Binici, a Turkish national, has been appointed to replace Esther Peries as new head of International Monetary Fund (IMF)

ISLAMABAD: (UrduPoint/UrduPoint / Pakistan Point News- Sept 10^th, 2024) At a crucial time for loan approval, the International Monetary Fund (IMF) on Tuesday appointed Mahir Binici as the new country head in Pakistan.

This appointment comes as the Pakistani government intensifies efforts to secure approval for a $7 billion loan in the final week of September.

Amidst this, skepticism about the IMF’s objectives is growing.

According to the reports, the concerns WERE raised about the IMF’s previous programs, which involved incorrect assumptions regarding the current account deficit. These programs led to Pakistan being compelled to seek new external loans to address these inaccuracies.

The situation has prompted several individuals including Deputy Prime Minister Ishaq Dar, to question the international financial institution’s goals.

The government officials reported that Mahir Binici, a Turkish national, has been appointed to replace Esther Peries. The IMF spokesperson has declined to comment on whether Binici’s appointment followed the end of Peries' term. The IMF’s previous two country heads in Pakistan were from Spain and had prior experience in Spain’s Ministry of Finance.

Binici, who has worked at the Central Bank of Turkey, specializes in macroeconomic policies and the financial sector, particularly in emerging markets. His significant challenge will be to facilitate the highly anticipated $7 billion Extended Fund Facility program, which faces risks before approval by the IMF Executive Board.

The State Bank Governor had indicated efforts would be made to secure loan approval in the first half of September. However, a senior government official now states that they are aiming for IMF board approval in the fourth week of September. In August, the IMF removed Pakistan from the list after the country failed to roll over $12 billion in cash deposits and secure $2 billion in new arrangements.

Binici’s secondary challenge will be to establish his office in Pakistan as a liaison between Islamabad and Washington.

The IMF has faced significant distrust from the government, experts, and the public in recent years. In addition to Pakistan’s own issues, IMF conditions have contributed to the country's economic slowdown, ongoing deterioration in the power sector, rising unemployment, and increasing poverty.

The IMF, considered a lender of last resort, has imposed a condition that Pakistan secure a $2 billion loan before it will approve further assistance. This condition has forced the Pakistani government to seek one of the most expensive loans in history.

The concerns are escalating within government circles regarding the IMF’s role and the design of its programs in Pakistan.

Despite substantial criticism, the IMF has pressured Pakistan to accept the unrealistic Rs13 trillion target set by the FBR, which is already facing a shortfall of Rs98 billion in just two months.

On September 7, Deputy Prime Minister Ishaq Dar revealed that the IMF had intended for Pakistan to default in 2022.

Dar warned fellow politicians to be cautious of measures affecting Pakistan’s status as a nuclear state. He previously claimed that geopolitical maneuvering was deliberately pushing the country towards default. The IMF had predicted a $6.5 billion current account deficit for Pakistan in the 2023 fiscal year.

At that time, the Pakistani government projected a deficit of $4 billion and stated it did not need additional financing.

The actual deficit was $3.3 billion, supporting Dar’s claim.

However, the IMF did not take action against its staff involved in discussions with Pakistan.

Additionally, the IMF is not allowing Pakistan to lower interest rates, even though its own benchmark suggests rates should be between 14% and 15%.

Such stringent conditions are affecting the IMF’s reputation in Pakistan.