The sun sets on the 8th of April as Pakistanis longingly await the 9th review of the IMF to be completed. The review was meant for the first quarter of FY23 and was supposed to happen in November. After the review, Pakistan was supposed to get its next tranche of the $6.5 billion Extended Fund Facility of the IMF. Ever since then, the people have been told that the review is going to be completed in “a few more days”.
In what could be another wolf-cry to stabilize the markets and investor sentiments, the finance minister Ishaq Dar told the nation that everything required for the 9th review of the IMF is now complete and the last thing required was the pledge of a friendly country for $1 billion. After which the tranche will be realized.
Talking to the nation after canceling his visit to Washington for the spring meetings of IMF and World Bank, Ishaq Dar stated that the reason to cancel his visits was the domestic political situation. Mr. Dar assured that the cancellation of his trip was in no way a comment on the future of the IMF deal and the deal was very close to its completion.
The 9th review; in retrospect
The IMF team came to Pakistan on the 1st of February, which was already pretty late in the context of the 9th review. What is however more important is the way in which their arrival was anticipated by the government.
In the start of December 2022, the Finance minister Ishaq Dar assured that within 2 weeks, friendly countries would lend $3 billion to Pakistan after which the IMF deal will come through.
On the 9th of January, the Prime Minister of Pakistan stated that the IMF team is about to arrive in a couple of days.
Weeks turned into months, days turned into weeks, but when the IMF team finally arrived, on the 1st of February, Pakistan was still not able to secure the Staff Level agreement. The two week long visit was followed by negotiations that were supposed to happen virtually. As per Ishaq Dar’s latest claims, those two weeks were the hardest part of the negotiations.
Little to no news left the boardrooms of these negotiations with the IMF but one after the other, steps were taken in lieu of the IMF prior conditions. Contentions on fiscal budget, revenue collection, exchange rate and smuggling all were resolved, and Pakistan imposed additional taxes worth Rs 170 billion. Currency was depreciated but the SLA still did not come through.
While presenting the finance (supplementary) bill in the Parliament on the 20th of February, the finance minister said that this was the last step required to fulfill the IMF program. Later, about a fortnight ago, it was told by the State Minister for Revenue Aisha Ghaus Pasha that the written assurance from friendly countries of financing to Pakistan is something that the IMF team requires. What is perhaps because of the tall claims made by Ishaq Dar last year, Pakistan now has to prove the worth of its friendships. Since then, the entirety of the Q-block has maintained that the IMF deal is about to materialize.
These presumably last minute housekeeping issues, that took a month to resolve finally seem to have come to a close. After a long wait, Saudi Arabia has assured its financing of $2 billion dollars to the IMF.
Talking to the nation today, Ishaq Dar said that only a written assurance of $1 billion dollars is needed after which all the prior actions that were required off of Pakistan will be fulfilled.
In his press conference, he also repeated that due to the Supreme Court’s order to give 21 billion for the Punjab elections by 10th April he had to cancel his Washington visit. He said that, ““Of course, the finance ministry and the cabinet have an important responsibility in this regard, and I’m a part of it,”
The minister said that even though he won’t be attending the meetings in person, a delegation representing Pakistan will be there.
“It’s astonishing that some are saying that I have been told not to go by the IMF. The IMF cannot tell me not to attend. Pakistan is a member of the World Bank and the IMF. It is not a beggar,” he said.
He accused some analysts of twisting the facts. “Someone is writing that I did not get the meetings I wanted. Someone else is suggesting that I should have ignored the [domestic] crisis and gone anyway,” he stated.
He also requested that “for God’s sake, please do not portray a picture that harms your own country’s interests.” According to him, despite the worst of the liquidity crisis, the country did not delay its global sovereign payments of $11bn by even a minute.