Thursday June 13, 2024

IMF review to conclude after Pakistan's financing in place

"IMF continues to work with the Pakistani authorities to bring the ninth review to conclusion," official says

By Business Desk
May 05, 2023
The International Monetary Funds logo. — AFP/File
The International Monetary Fund's logo. — AFP/File

As Pakistan seeks to secure crucial International Monetary Fund (IMF) funding to avoid an economic collapse, the lender said it is working with the government to conclude the ninth review of the bailout programme, Reuters reported Friday.

The Washington-based lender and the federal government are in talks over reviving the stalled ninth review, which will unlock a $1.1 billion loan — part of the $6.5 billion programme agreed upon in 2019.

To meet the IMF's loan requirements, Pakistan took several fiscal reforms which have fuelled the highest-ever inflation, posted at 36.4% in April.

The IMF funding is crucial for Pakistan to avert a default on its external payment obligations during a balance of payment crisis, in which foreign exchange reserves have shrunk to just four weeks of controlled imports.

"The IMF continues to work with the Pakistani authorities to bring the ninth review to conclusion once the necessary financing is in place and the agreement is finalised," mission chief Nathan Porter said in a statement to Reuters.

"The IMF supports the authorities in the implementation of policies in the period ahead."

The IMF mission chief said this will also include technical work to prepare the budget for the fiscal year 2024, set to be passed by the National Assembly before end-June.

The Pakistan Democratic Movement (PDM)-led government — as part of fulfilling prerequisites for the loan — has assured the lender that it has fully funded the balance of payments gap for the ongoing fiscal year, which ends in June.

In addition to that, although the funds have not been received as of yet, Pakistan has also announced pledges of $3 billion from friendly nations, including Saudi Arabia and the United Arab Emirates. All-weather ally China has rolled over and refinanced its loans.

"Islamabad and the IMF have had differences over the gap. It was not clear if the Saudi, UAE and Chinese financing would be sufficient, or if more external support would be needed," the news agency reported.

"It was also not immediately clear why the lender wanted to work on the technical preparation of the budget, which is not covered by the programme," it added.