IMF to consider Pakistan’s request for using $2b for budgetary support

ISLAMABAD: The IMF’s Executive Board will consider Pakistan’s request for utilising around $2 billion for budgetary support in the next fiscal year out of total size of $6 billion bailout package agreed by Islamabad and the Fund authorities last month.

The IMF’s Executive Board is expected to take up approval of Pakistan’s bailout package by next month (July 2019). After implementation on all prior action under the IMF programme, Adviser to PM on Finance and Revenue Dr Abdul Hafeez Shaikh and Governor State Bank of Pakistan Reza Baqir will formally sign letter of intent (LoI) and memorandum of economic and financial policies (MEFP) probably in third or fourth week of the ongoing month.

The signed LoI and MEFP will be circulated before the members of the IMF’s Board around few weeks prior to fixation of the meeting for consideration of Pakistan’s request for next bailout package. Usually, it requires four to six weeks period to approve any country’s request for deciding the loan package.

This correspondent sent a question to the IMF’s Resident Chief Teresa Daban Sanchez regarding provision of Rs357 billion budgetary support from the IMF shown in the budget documents for 2019-20, she replied that the members of the IMF have the prerogative to request the IMF’s Board of Directors that part of the IMF resources could be used as budgetary support. This is something to be decided by the Board of Directors of the IMF, she added.

To another question regarding allowing of deposits from friendly countries for budgetary support, she said the use of funding from friendly countries is something to be agreed by the friendly countries themselves and government of Pakistan.

Meanwhile, the IMF Director Communication Gerry Rice in a press briefing at Washington DC stated that Pakistan has requested a programme from the IMF.

“Last month, we reached a staff-level agreement on that programme so that’s now under discussion. So, I don’t really have a specific comment on the budget,” he added.

But in terms of our discussions, he said he could only say that they are talking about broadly how to restore stronger, more balanced growth by reducing domestic and external imbalances, improving the business environment, strengthening institutions, increasing transparency and importantly protecting social spending. “Protecting social spending is in fact an important part of the discussion that we are having on a programme with Pakistan,” he said.