By Staff Reporter
ISLAMABAD: The International Monetary Fund (IMF) said on Thursday its mission would visit Pakistan on January 31 to discuss the stalled ninth review of a bailout programme.
The country is in dire need of funds to cover its current account deficit and debt obligations and to shore up its foreign exchange reserves which have declined to a staggering $3.6 billion as of week ended January 20.
“At the request of the authorities, an in-person Fund mission is scheduled to visit Islamabad January 31st – February 9th to continue the discussions under the ninth EFF review,” IMF’s resident representative Esther Perez Ruiz said in a statement.
Pakistan’s ninth review of staff-level talks with the IMF for the release of its next tranche has been delayed since September because of the inability of both sides to strike a consensus on several issues.
The IMF program requires Pakistan to implement strict economic reforms.
Ruiz said the mission would focus on policies to restore domestic and external sustainability in Pakistan, including to strengthen the fiscal position with “durable and high-quality measures” while supporting the vulnerable and those affected by the floods.
The lender further said the mission would also focus on restoring the viability of the power sector and reversing the “continued accumulation of circular debt”; and re-establishing the proper functioning of the FX market, allowing the exchange rate to clear the FX shortage.
“Stronger policy efforts and reforms are critical to reduce the current elevated uncertainty that weighs on the outlook, strengthen Pakistan’s resilience, and obtain financing support from official partners and the markets that is vital for Pakistan’s sustainable development,” Ruiz said.
Pakistan’s economic crisis has worsened in recent days. Shipping containers full of imports are piling up at ports, according to the country’s central bank, with buyers unable to secure the dollars to pay for them. Associations for airlines and foreign companies have warned they have been blocked from repatriating dollars by capital controls imposed to protect dwindling foreign reserves. Officials said factories such as textile manufacturers were closing or cutting hours to conserve energy and resources.
Islamabad has been actively looking for external financing from friendly nations and international lending agencies amid a mounting current account deficit and depleting forex reserves.
The central bank on Thursday said its reserves dropped a massive $923 million to a mere $3.7 billion
This is the lowest level of SBP-held reserves since February 2014.
Total liquid foreign reserves held by the country stood at $9.5 billion. Net foreign reserves held by commercial banks stood at $5.8 billion.
Earlier this week, Prime Minister Shehbaz Sharif said Pakistan had given a “clear message” to the IMF that it was ready for the ninth review of its loan program. He said Islamabad wanted to hold talks with the international lender so Pakistan can move forward.
Pakistan has sought support from Washington to unlock the stalled programme that would release $1.1 billion to its strained economy.
Finance Minister Ishaq Dar met a visiting US Treasury delegation earlier this week and told them that Pakistan would honour its international commitments and was in the process of taking “very tough decisions” such as increasing natural gas and electricity prices.
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