Pakistan needs energy reforms to become debt free: US official

WASHINGTON: Pakistan needs to undertake energy reforms and switch to renewable energy sources, a senior US official has said, noting that the reforms suggested by the International Monetary Fund (IMF) would help Islamabad break the “vicious cycle of debt and international financing”.

Principal Deputy Assistant Secretary Elizabeth Horst, who heads the State Department’s Office of Central and Southern Affairs, stressed the need to implement reforms to meet future challenges.

Acting Prime Minister Anwaarul Haq Kakar is expected to discuss the economic crisis with US and IMF officials when he meets them in New York later this month. His delegation also includes the Minister of Finance.

“These are difficult economic times, in Pakistan, in the United States and around the world,” Ms. Horst said when asked how Washington could help Islamabad avoid an economic collapse. “We work every day to help Pakistan advance economic reforms that will make it more competitive and better prepared to face future challenges,” she added.

Elizabeth Horst says Washington helps Islamabad on economic front

The US official then highlighted his country’s recent efforts to help ease the pressure of economic hardship, including assistance to victims of the devastating floods of last yearwhich includes more than $215 million for emergency shelter, disaster relief and food.

“At the same time, we are building for the future by helping Pakistan move from recovery to resilience. Through the US-Pakistan Green Partnership, we are making strategic investments in energy, water, and agriculture that strengthen climate resilience, drive energy transformation, and foster inclusive economic growth,” he said.

‘Need for investment’

Underlining the need to encourage foreign investment in Pakistan, he said: “We want Pakistan to succeed in an increasingly competitive market for American trade and investment. It’s no secret that there are huge benefits for both countries when US companies invest in Pakistan.”

US investments in Pakistan create good-paying 21st-century jobs, provide training and skills development for workers and help ensure respect for international labor standards, he said.

Without mentioning investments from other nations, such as China, which Washington says have increased Pakistan’s debt burden, the official said: “American companies bring investments, not loans, and give back to local communities through responsibility initiatives.” corporate social. That is why it is so important for Pakistan to move forward with economic reforms, to instill the confidence and certainty needed for companies to invest.”

When reminded that consumers in Pakistan were refusing to pay your electricity bills Because they couldn’t and because of an agreement with the IMF, the government can’t cut bills, he said that with global economic conditions driving up commodity prices, many countries were dealing with high inflation and its “very high impacts.” impact on people’s lives and livelihoods”.

energy reforms

But he defended IMF-backed programs. “One of the things that people often overlook is that the IMF is working to help Pakistan make the necessary reforms to break free from the vicious cycle of debt and international financing,” she said. “Reform in the energy sector is long overdue. And indeed, there are programs to help ease the burden on the poorest.”

Acknowledging that “it is a universal truth that no one likes to pay more bills,” he warned: “Without energy sector reform, Pakistan’s entire economy will continue to struggle” and “we, and Pakistan’s other friends, are here to support Pakistan’s efforts in that regard.”

However, such reforms “will require strong leadership and patience, but without making these changes on issues like tax and investment, for example, Pakistan will not be able to stand on its feet,” the US official said.

The IMF program, he said, was only part of the reforms that Pakistan needs to undertake. “A prosperous and economically stable Pakistan, marked by inclusive growth that provides opportunities for future generations, is in the best interest of the people of Pakistan, and also in our interest,” Ms. Horst explained.

Posted in Sunrise, September 3, 2023