Wednesday March 29, 2023

IMF team due in Pakistan soon to discuss 9th review

Global lender's delegation is scheduled to visit Islamabad from January 31-February 9

January 26, 2023
The International Monetary Funds (IMF) logo. — AFP/File
The International Monetary Fund's (IMF) logo. — AFP/File

ISLAMABAD: The International Monetary Fund (IMF) will be sending a delegation to Pakistan by the end of this month to discuss the stalled 9th Extended Fund Facility review, an official said.

Islamabad is dealing with a severe economic crunch as the foreign exchange reserves are at their lowest levels in more than eight years and the Pakistani rupee has dropped to historic lows, with the government now eyeing to revive the bailout programme as it nears a default risk.

In a message to The News, IMF Resident Representative in Pakistan Esther Pérez Ruiz, said: "At the request of the authorities, an in-person Fund mission is scheduled to visit Islamabad January 31–February 9 to continue the discussions under the ninth EFF review."

The representative mentioned that the delegation would be focusing on several policy areas during their meetings with the Pakistani officials, who are now taking steps to meet the Fund's prerequisites for the programme's revival.

"The mission will focus on policies to restore domestic and external sustainability, including to strengthen the fiscal position with durable and high-quality measures while supporting the vulnerable and those affected by the floods; restore the viability of the power sector and reverse the continued accumulation of circular debt; and reestablish the proper functioning of the FX market, allowing the exchange rate to clear the FX shortage."

Stronger policy efforts and reforms, she mentioned, are critical to reduce the current elevated uncertainty that weighs on the outlook, strengthening Pakistan’s resilience, and obtaining financing support from official partners and the markets that are vital for Pakistan’s sustainable development.

The development comes a day after Prime Minister Shehbaz Sharif reiterated that the government had informed the IMF that it was keen to complete the ninth review.

"We want to conclude the terms through negotiations without any delay so that Pakistan could move ahead," the prime minister said during his address at an event in Islamabad.

The prime minister, who formed the government in April after ousting Pakistan Tehreek-e-Insaf (PTI) Chairman Imran Khan from office, expressed optimism that the country’s other multilateral and bilateral programmes would also move forward.

The government had been reluctant to fulfil the Fund's conditions earlier and also asked the money lender to relax the conditions after cataclysmic floods hit the nation, dealing damages worth over $30 billion.

Moreover, as lenders await the IMF nod, inflows have virtually come to a grinding halt despite assurances from friendly nations, leaving the State Bank of Pakistan's foreign exchange reserves at a record low of $3.7 billion — barely enough for a month's import payments.