IMF deal or no IMF deal? Pakistan faces new challenges

Pakistan has to satisfy the IMF on three counts, starting with a budget to be presented on Friday, before its board will review whether to release at least some of the $2.5 billion still to be disbursed under a lending programme that will expire at the end of this month, an IMF official said.

Esther Perez Ruiz, the International Monetary Fund’s resident representative for Pakistan, said on Thursday that there was only time for one last IMF board review before the scheduled end of the $6.5 billion Extended Fund Facility (EFF).

Pakistan has barely enough currency reserves to cover one month’s imports. It had hoped to have $1.1 billion of the funds released in November – but the IMF has insisted on a number of conditions being met before it makes any more disbursements.

“As communicated to the authorities, there can be one remaining Board meeting under the current EFF at end-June,” Perez Ruiz said in an email response to Reuters. “To pave the way for a final review under the current EFF, it is essential to restore the proper functioning of the FX market, pass a FY24 Budget consistent with programme objectives, and secure firm and credible financing commitments to close the $6 billion gap ahead of the Board,” she added.

With just over three weeks to go before the EFF expires, there is a lot the government has to do.

The IMF had tasked Pakistan with securing external financing commitments for $6 billion from other sources, but so far it has only obtained commitments for $4 billion, mostly from Saudi Arabia and the United Arab Emirates.