Pakistan, IMF rule out possibility of ending programme at this stage

ISLAMABAD: Amid a massive fall in the exchange rate, imposition of a power surcharge and hike in the policy rate by 300 basis points in a day, all eyes are now set on striking the staff-level agreement with the IMF for avoiding default.

The Fund and the high-ups in Pakistan are busy giving the final touches to the draft of the Memorandum of Economic and Financial Policies (MEFP) for accomplishing the much-awaited 9th Review and release of the $1 billion tranche under the $6.5 billion Extended Fund Facility (EFF).

Consensus on the text of MEFP and its targets for macroeconomic and fiscal framework during the remaining period of the EFF programme till the end of June 2023 will pave the way for striking the agreement.

“There is no possibility of ending the ongoing EFF program at this stage, as the Fund staff also considers that the different tough measures taken by the Government of Pakistan will help stabilise the economy and avoid default till June 30, 2023,” top official sources said.

Meanwhile, Minister for Finance Ishaq Dar Thursday tweeted that anti-Pakistan elements were spreading malicious rumours that Pakistan might default.

“This is not only completely false but also belies facts. The SBP forex reserves have been increasing and are almost US $1 billion higher than four weeks ago despite making all external due payments on time,” he tweeted.

“Foreign commercial banks have started extending facilities to Pakistan. Our negotiations with IMF are about to conclude and we expect to sign Staff Level Agreement with IMF by next week. All economic indicators are slowly moving in the right direction” he added.

Responding to PTI Chairman Imran Khan, Dar alleged that Khan was responsible for the economic disaster.

“It was you (Imran Khan) who brought Pakistan to the brink of economic collapse and with God’s help, the country was relieved of your rule. We are making all our efforts to rectify the blunders you committed during your rule. We will soon share the good news with the nation,” he added.

On the IMF front, the sources said the IMF side had conveyed to the Pakistani side that they were not changing the goalposts, instead, it was the Pakistani authorities delaying the much-needed undertaking of structural reforms, so the Fund staff just pursued them to implement the agreed actions. Now the blame game once and for all should be abandoned and both sides should move towards the signing of a staff-level agreement for reviving the IMF programme, which had stalled since last November 2022.

“The IMF asks Pakistan to stick to the policy of market-based exchange rate, erase the monster of circular debt through the imposition of surcharge and tighten the monetary policy,” said the official.