No matter what the current government tells people, the IMF mission is still waiting for confirmations of necessary bilateral and external financing sources, as per the IMF mission chief.
The International Monetary Fund (IMF) said on Saturday that it is “looking forward to obtaining the necessary financing assurances as soon as possible to pave the way for the successful completion of the 9th EFF review.”
IMF Mission Chief to Pakistan Nathan Porter through his representative in Pakistan in a statement said that “We welcome the recent announcement of important financial support to Pakistan from key bilateral partners”, During the meetings between the Pakistani delegation and IMF staff and management, there was agreement on the need to maintain strong policies and secure sufficient financing to support the authorities’ implementation efforts.
“The IMF is supporting these efforts and looks forward to obtaining the necessary financing assurances as soon as possible to pave the way for the successful completion of the 9th EFF review”, the statement added.
IMF’s 9th review in retrospect:
The IMF delegation came to Pakistan on the 1st of February, which was already pretty late in the context of the 9th review of its Extended Fund Facility (EFF). The visit was a long anticipated one by the government at that time, and the government reassured the people, time and again about the arrival of the said visit.
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.
Since the IMF team has left Pakistan, Pakistan has made a considerable number of changes in its tax collection targets, its exchange rate and trade policies and expenditures.
In lieu of the IMF agreement, the government has been able to impose Rs. 170 billion in additional taxes. The exchange rate has dropped to a historic low, levy on petroleum products and electricity tariffs have been increased and subsequently the interest rate and inflation are at also at a historically highest level. But still, the IMF agreement seems far away.
What is the delay?
According to media reports, the IMF wants an external financing assurance of around $6 billion dollars from Pakistan which is necessary to bridge Pakistan’s external financing needs. It is reported that the government is still trying to secure the remaining $3 billion.
Recently, the Finance minister Ishaq dar claimed that UAE has given assurance to the IMF for a $1 billion loan to Islamabad, similarly, State Minister for Finance and Revenue Ayesha Pasha informed the Parliamentary committee last week that Saudi Arabia has already given assurance for a $2 billion loan.
Sources said that the Finance minister on Friday requested the World Bank to disburse loan under the RISE program as the federal and provincial government has met the conditions related to sales tax. Pakistan is expected to receive an estimated amount of $600 million from the world bank and other multilateral flood-relief commitments.
Earlier, Pakistan was banking on a higher commitment from its bilateral partners. However, as of now, the government is once again looking at commercial loans for the remaining amounts. It is also important to note that once the SLA is reached, Pakistan will also receive a tranche of $1.1 billion from the IMF.
It is pertinent to note that the Pakistani delegation under the supervision of the Finance Secretary is meeting with heads of International Financial organizations in the US as part of the IMF/World Bank Spring meetings 2023.
Meeting with AIIB President on the sidelines:
According to the Finance ministry, Federal Minister for Finance and Revenue Senator Mohammad Ishaq Dar on Saturday held a meeting with Jin Liqun, President Asian Infrastructure and Investment Bank (AIIB) virtually, through video link, from Islamabad as part of the IMF/World Bank Spring meetings 2023.
Finance Minister Mohammad Ishaq Dar shared the current economic outlook of the country and apprised him of the economic policies and reforms of the government for sustainable economic development.
The Finance Minister thanked the President AIIB for his generous support in rehabilitation and reconstruction efforts in the flood affected areas in Pakistan.
The President AIIB lauded the relationship between Pakistan and the AIIB and appreciated the economic policies and reforms of the present government for social uplift of the masses. He highlighted the role of AIIB in infrastructure development projects and investment and extended AIIB’s complete support and cooperation to Pakistan.
The Finance Minister thanked the President AIIB for his continuous support to Pakistan for the sustainable economic development of the country.
