ISLAMABAD: As Pakistan restored market-based exchange rate, the IMF on Thursday announced that its delegation will visit the cash-strapped country next week to pave the way for the release of the next tranche of its assistance package.
Pakistan entered a $6 billion International Monetary Fund (IMF) programme during Imran Khan‘s government in 2019, which was increased to $7 billion last year. The programme’s ninth review is currently pending with talks being held between IMF officials and the government for the release of $1.18 billion.
According to official sources, the IMF team would be in Islamabad from January 31 to February 9 to hold talks with the officials over the implementation of its conditions attached with the assistance package.
The ninth review was pending due to reluctance of the government to increase rates of electricity and gas and take other measures which would bring a new wave of inflation in the country in the election year.
However, as the IMF refused to budge on its demands, Prime Minister Shehbaz Sharif indicated that the government is finally ready to swallow the bitter pill of the IMF’s “stringent” conditions to revive the loan.
The IMF Resident Representative for Pakistan, Esther Perez Ruiz, in a statement announced that the global lender will send its delegation. “At the request of the authorities, an in-person Fund mission is scheduled to visit Islamabad [from] January 31 – February 9 to continue the discussions under the ninth EFF review,” according to the statement.
She said that the mission would focus on policies to restore domestic and external sustainability, including to strengthen the fiscal position with durable and high quality measures while supporting the vulnerable and those affected by the floods; restore the viability of the power sector and reverse the continued accumulation of circular debt; and re-establish the proper functioning of the foreign exchange market, allowing the exchange rate to clear the forex shortage.
“Stronger policy efforts and reforms are critical to reduce the current elevated uncertainty that weighs on the outlook, strengthen Pakistan’s resilience, and obtain financing support from official partners and the markets that is vital for Pakistan’s sustainable development,” she said.
The announcement by the IMF came as US Ambassador to Pakistan Donald Blome called on Prime Minister Sharif.
“The Prime Minister thanked the United States for its continued support for Pakistan’s post-flood reconstruction and rehabilitation efforts, including at the recently held International Conference on Resilient Pakistan in Geneva,” according to a statement issued by the PM Office.
The Prime Minister in the meeting reiterated that Pakistan attached importance to its longstanding ties with the United States.
He reaffirmed Pakistan’s resolve to deepen economic and trade engagement with the US.
Noting the recent momentum in high-level bilateral exchanges, the Prime Minister stressed that structured and broad-based Pakistan-US engagement was critical to advancing both countries’ shared goals in both the bilateral and regional domains.
Ambassador Blome said that the United States would continue to support Pakistan’s post-flood recovery as well as the Government’s efforts for economic development and reform.
Earlier, Finance Minister Ishaq Dar asked a visiting US delegation on Wednesday to help convince the IMF to be lenient towards Pakistan in restoring the program. He also promised to honour all its international commitments.
Apparently, the IMF agreed to send a delegation after Pakistan allowed the rupee to depreciate massively by over Rs24 to adjust as per the market oriented rate. It was one of the key demands of the lender.
Pakistan is battling to fix its economic and political fissures amidst a parochial political rivalry between former premier Imran Khan and the current government.