Sunday June 16, 2024

Pakistan to 'end existing IMF programme, plans to negotiate new deal'

"Completion of all reviews before June 30 seems impossible and govt has decided against seeking an extension," sources say

By Ashraf Malkham
June 01, 2023
People attend the 2023 Spring Meetings inside the International Monetary Fund in Washington, US, April 12, 2023. — AFP
People attend the 2023 Spring Meetings inside the International Monetary Fund in Washington, US, April 12, 2023. — AFP

ISLAMABAD: The coalition government is planning to conclude the International Monetary Fund's (IMF) $6.5 billion Extended Fund Facility (EFF) without completing all pending reviews, sources told Geo News, adding that Pakistan has decided to negotiate a new programme with the lender "immediately after budget".

The sources said that while negotiations on the ninth review were almost complete, a staff-level agreement is yet to be reached. Even after this review completes, the 10th and 11th reviews will remain pending.

It should be noted that the coalition government has been negotiating with the Washington-based lender to revive its bailout programme since November, with the financing gap among the biggest roadblocks. There’s about $2.5 billion left to disburse from the $6.5 billion programme that’s scheduled to expire on June 30.

“Completion of both reviews before June 30 seems impossible and the government has decided against seeking an extension,” the sources said, adding that Ishaq Dar-led Ministry of Finance will approach the Fund for a new programme after the budget — which is expected to be tabled on June 9.

The sources further revealed that if the coalition government fails to complete the negotiations before its term ends in August, the caretaker government will hold talks with the Washington-based lender.

Disclosing some of the details of the new programme, the sources said that the economic team has begun working on the agreement “which is expected to be tougher” than the existing programme agreed in 2019 by the Pakistan Tehreek-e-Insaf (PTI) government.

Moreover, they said that the new bailout programme will likely be for more than three years. “Pakistan will desperately need an IMF programme in September as the country needs to pay around $9-11 billion dollars in repayments of external debt by December 2023,” they added.

Earlier this week, Reuters reported the lender asserted that it is in touch with Pakistan's authorities to pave the way for a board meeting before the financing programme expires at the end of June.

A board meeting on a review of the programme usually requires a prior staff-level agreement.

"This engagement will focus on the restoration of foreign exchange proper market functioning, the passage of a federal budget consistent with programme goals, and adequate financing," IMF Mission Chief for Pakistan Nathan Porter said.

On Sunday, Finance Minister Ishaq Dar said Pakistan will share its budget details with the fund. He added that he would like the IMF to clear its ninth review before the budget, which is due to be presented in early June, as all the conditions for that had already been met.

"They have asked for some more things again, we are ready to give that too, they say that give us budget details, we will give it to them," Dar said in an interview with Geo News.

Regarding the next reviews, he said it would not work for Pakistan if the IMF combined the ninth and tenth reviews of the bailout, adding, "We will not do it, (we) see this is (as) unfair."