The Pakistani government and the International Monetary Fund (IMF) were discussing a $2.5-billion “standby arrangement” for six to nine months as the current bailout programme is set to expire on Friday (June 30). On Tuesday, Pakistan Finance Minister Ishaq Dar said the two sides were working on a “mechanism” to ensure that Islamabad got the entire amount and not just the close to $1.1 billion due under the current review, the news agency Reuters reported on Wednesday.
However, Finance Minister Dar did not elaborate on what the mechanism was. The government is currently racing against time to unlock $1.1 billion under the lender’s ninth review of a $6.5-billion Extended Fund Facility agreed upon in 2019.
As per a report by the Express Tribune, the ninth review is in order after recent adjustments but Pakistan is keen to receive the entire undisbursed amount, which is only possible in a new programme. The report added that Prime Minister Shehbaz Sharif discussed signing a new standby arrangement (SBA) worth $2.6 billion for six months with IMF Managing Director Kristalina Georgieva.
‘Pak taking decisive steps to push through economic reforms’
On Tuesday, the IMF said that Pakistan was taking decisive steps to push through a series of economic reforms. In a statement, IMF’s Pakistan mission chief Nathan Porter said that the country’s authorities were bringing in policies more in line with the economic reform programme supported by the lender.
“The IMF team continues discussions with Pakistani authorities with the aim of quickly reaching an agreement on financial support,” the statement added.
Porter said that the steps taken by the government include parliament’s approval of a budget that expands the tax base and allows for more social and development spending, and efforts to improve the functioning of the foreign exchange market.
The IMF mission chief also cited the country’s tightening of monetary policy to reduce inflationary and balance of payment pressures that “affect particularly the more vulnerable.”
In the FY 24 budget, the government had earmarked $2.5 billion in external receipts from the IMF. Pakistan needs upwards of $22 billion to service external debt, make interest payments, and finance its current account for FY24.
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