IMF no hurry to provide financial support to Pakistan
2023.02.10 04:30
IMF no hurry to provide financial support to Pakistan
By Kristina Sobol
Budrigannews.com – On Friday, Pakistan and the International Monetary Fund said they were still talking about a deal to give the South Asian nation $1.1 billion in money that is important for keeping its economy going.
After ten days of negotiations to release the funds, which are part of a $6.5 billion bailout that Pakistan signed in 2019, an IMF mission left Islamabad on Friday.
Ishaq Dar, Pakistan’s Finance Minister, told reporters that Pakistan and the IMF had agreed on the terms for releasing the funds, which had been delayed since December. He stated that talks with the IMF would virtually resume on Monday and that “routine procedures” were the reason for the delay.
Dar stated, “We will put into action whatever has been agreed upon between our teams.” Pakistan IMF Mission Chief Nathan Porter stated in a statement that talks were continuing and that significant progress had already been made.
Pakistan needs a successful outcome badly. The devastating floods of last year continue to wreak havoc on the economy, which is worth $35 billion, and the government estimates that efforts to rebuild will cost $16 billion.
The nation, which is heavily indebted, only has sufficient foreign reserves to cover essential imports for less than three weeks. According to analysts, the likelihood of default increases the longer it takes for the IMF tranche to be paid out.
Prime Minister Shahbaz Sharif referred to Pakistan’s economic situation as “unimaginable” the previous week.
Former finance ministry adviser Khaqan Najeeb told Reuters, “Ideally, Pakistan should have reached a staff level agreement at the end of the IMF mission.”
“Delay can’t go on.”
Before the funds are distributed, the so-called staff-level agreement must be reached and approved by the IMF headquarters in Washington.
The remaining $1.4 billion of the $6.5 billion bailout program, which is scheduled to end in June, is in addition to the stalled tranche.
According to experts, Pakistan requires the payment as soon as possible. According to former Deputy Governor Murtaza Syed, if this continues for more than a month, “things get more difficult as our forex reserves have reached a critical level.”
Pakistan recently implemented measures that have already sent inflation to a record high, 27.5% year-over-year in January, and created shortages in some imported goods. The conditions set by the IMF include a return to a market-based exchange rate and higher fuel prices.
Dar stated that Pakistan had also agreed to implement fiscal measures, including new taxes, with the IMF.
Analysts are concerned that further fiscal tightening could push the economy even deeper into trouble.
Sakib Sherani, who served as the finance ministry’s principal economic adviser from 2009 to 2010, stated, “The government has not only wasted over five months in realizing the gravity of the situation, but it is still sleepwalking the country into an economic abyss.”
