Tuesday October 03, 2023

IMF accord hinges on financial support from KSA, UAE

March 28, 2023
A foreign currency dealer counts US dollars at a shop in Karachi, Pakistan, on May 19, 2022. — AFP/File
A foreign currency dealer counts US dollars at a shop in Karachi, Pakistan, on May 19, 2022. — AFP/File

ISLAMABAD: The much-awaited Staff Level Agreement between Pakistan and the IMF will only be struck as soon as the financial support confirmation from the Kingdom of Saudi Arabia and UAE is received.

“As soon as support confirmation from KSA and UAE are received by the IMF then the staff level agreement will be signed with the IMF,” top official sources confirmed while talking to The News here on Monday.

Federal Minister for Finance Ishaq Dar had informed diplomats in Islamabad at the Iftar dinner on Sunday that the matters with the IMF would be settled soon. Almost 46 days have passed since the IMF and Pakistan concluded review talks here in Islamabad on February 9 and the very next day Minister for Finance Ishaq Dar claimed that the virtual talks have begun and the staff-level agreement would be signed within a few days. However, it could not be done even after the passage of 46 days.

On the issue of cross-fuel subsidy, there have been dissenting views within the Ministry of Finance because the timing of the announcement could not be endorsed at all. It remains to be seen how the Ministry of Finance will satisfy the IMF on the subsidy. The bureaucrats from the Ministry of Finance had resisted the scheme tooth and nail but the government went ahead and made it public. The move was undertaken by the PM Office.

“We have made it clear that such schemes cannot be implemented in view of the IMF’s known opposition to subsidies. At this point, the revival of the IMF programme is imperative and such schemes would jeopardise the whole process,” said some top officials. They added they did not know about any progress on the contentious cross-fuel subsidy issue at this point in time.

In case the IMF programme is revived then the question will arise as to how the next 10th and 11th reviews will be accomplished. The 10th review was due on February 3, 2023. While the 11th review would be due on May 3, 2023 and it is not yet known how both sides would proceed even after the revival of the Fund programme.