IMF ready to send mission to Pakistan for final review after cabinet formation

The International Monetary Fund (IMF) announced its readiness to send a mission for the second review of the Stand-by Agreement (SBA) shortly after the Shehbaz Sharif-led coalition government formed a cabinet. 

“We look forward to working with the government to ensure stability, macroeconomic stability, for the good of the people of Pakistan,” said Julie Kozack, Communications Director of the IMF in a press briefing late Thursday. 

The focus, therefore, is currently on completion of the current Stand-by program, which ends in April 2024, she elaborated in response to a query regarding Pakistan. 

Ms Kozack, however, refrained from commenting on the ongoing political situation in Pakistan. 

“I'm not going to comment on politics. Only to say that the IMF stands ready to send a mission after a new cabinet is formed, and we look forward to working with the government to ensure stability, macroeconomic stability, for the good of the people of Pakistan.” 

Pakistan hardly escaped a sovereign default in June 2023 and averted it by securing a $3 billion stand-by arrangement (SBA) from the IMF at the eleventh hour. 

Now, the country urgently needs a fresh IMF agreement to shore up its struggling $350 billion economy, which is suffering from high inflation, low reserves and mounting external financing needs.

The IMF director recalled the Executive Board’s approval for the first review on January 11, bringing total disbursements under the SBA to about $1.9 billion. 

The SBA-supported program underpins the authority’s efforts to stabilise the economy with a strong emphasis on protecting the most vulnerable segments of the population.

“During the period of the caretaker government, the authorities have maintained economic stability through strict adherence to the fiscal targets while protecting the social safety net, maintaining a tight monetary policy stance to control inflation, and continuing to build foreign exchange reserves,” Ms Kozack.

“This has been done at the same time as implementing timely adjustments in tariffs to shore up the viability of the energy sector.” 

This development comes days after Prime Minister Shehbaz Sharif, the very next day after assuming his office, gave a task to his team to fast-track negotiations with the IMF to secure another lifeline to meet the country's outstanding foreign debt repayment obligation.