Pakistan’s Financing to be determined after the ninth review, IMF Chief

ISLAMABAD: The International Monetary Fund (IMF) has said the 9th review of the $1.2 billion bailout program for Pakistan will be completed once necessary financing is in place and an agreement is finalized.

On Friday, the IMF chief said that the organization is working with local authorities in Pakistan to conclude its 9th review of the bailout program in connection with the “critical” funding required by the “cash-strapped” country to avoid an economic collapse.

Pakistan and the IMF have been engaged in discussing fiscal policy measures since February, to resume the stalled funding which was due in November, agreed upon in 2019.

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It is pertinent to mention that the funding is critical for Pakistan as it is currently facing a payment crisis which may lead to an economic collapse similar to Sri Lanka’s crisis from the previous year. Additionally, Pakistan’s foreign exchange reserves are at an all-time low, with enough to “pay for four weeks of controlled imports”, reported Dawn.

In a statement given to Reuters, mission chief Nathan Porter said: “The IMF continues to work with the Pakistani authorities to bring the ninth review to a conclusion once the necessary financing is in place and the agreement is finalised”. It was further stated that the IMF extends support to relevant authorities in the “implementation of policies in the period ahead” including the “technical work to prepare the FY24 budget” which will be passed on to the National Assembly (NA) by the end of June.

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Moreover, according to Dawn, Pakistan has assured the IMF that its “balance of payments gap” for the ongoing fiscal year expected to end in June, is “fully funded”. On the other hand, Pakistan announced it hoped to receive $3 billion in “financial support” from the UAE and Saudi Arabia, however, the funds have not yet been transferred.

According to Baaghi TV reports, the IMF statement highlights a growing lack of trust between Pakistan and the international fund. It is pertinent to mention that Porter’s statement negates the government’s claim to have completed all the necessary preliminary steps to complete the 9th review, especially concerning the policies IMF hopes to implement, including the budget for the next financial year.

Previously, Prime Minister Shehbaz Sharif and Finance Minister Ishaq Dar claimed Pakistan had fulfilled “pre-conditions” of the Staff Level agreement so there is no reason for not having a final agreement. However, Porter’s statement to Reuters, further affirms that Pakistani authorities have been making false claims since 9 February.

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On the other hand, while the bilateral talks ended inconclusively, Nathan Porter did not specify the amount of financing required for Pakistan to secure the $1.2 billion loan and complete the 9th review, which is already seven months behind schedule.

Additionally, senior officials of the Ministry of Finance are of the opinion that the IMF should not link the approval of the ninth review with the budget. The issue of the budget should be taken up during the debate for the 11th review. A member of the cabinet, on condition of anonymity, said that the IMF’s demand is worrisome.

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