By Staff Reporter
ISLAMABAD: The International Monetary Fund (IMF) said it continues to engage with Pakistan to pave the way for a board meeting before its $6.7 billion stalled bailout expires at the end of June.
“IMF staff continues the engagement with the Pakistani authorities to pave the way for a Board meeting before the current program expires at end-June,” Nathan Porter, IMF mission chief for Pakistan, said in a statement issued late on Monday.
“This engagement will focus on the restoration of foreign exchange proper market functioning, the passage of an FY24 budget consistent with program goals and adequate financing.”
Pakistan has been struggling to reach a deal with the IMF to release funds critical to stabilising the economy.
The country has been negotiating with the IMF to restart its bailout program since November, with the financing gap among the biggest roadblocks. There’s about $2.7 billion left to disburse from the $6.7 billion program that’s scheduled to expire next month.
Pakistan is stepping up efforts to secure funding as it teeters on the edge of a sovereign default. The country faces about $22 billion of external debt service for the fiscal year 2024, which begins in July, which is about five times its current reserves.
In March, the IMF asked Pakistan to secure financing assurances from friendly states and multilateral donors before it could release the tranche, after which China rolled over its $2 billion loan to the cash-strapped nation. This was followed by a $2 billion pledge by Saudi Arabia and the UAE promising $1 billion support to Islamabad.
Defense Minister Khawaja Asif last week said Saudi Arabia would be depositing an additional $2 billion in the central bank before the June deadline of the bailout program.
Porter said more broadly, “overcoming the present economic and financial challenges would require sustained policy efforts and reforms for Pakistan to regain strong and inclusive private-led growth”.
“Strengthening domestic revenue mobilization and eliminating state-owned enterprises (SOE) losses to create fiscal space is also critical for ongoing sustainability, reducing inefficiencies which affect the private sector, and allowing a scaling up of social and development spending.”
The IMF mission chief also hopes Pakistan can find a peaceful way forward amid political turmoil and urges the country to maintain strong policies and secure enough financing from partners to stabilise its economy.
“We take note of recent political developments, and while we do not comment on domestic politics, we do hope that a peaceful way forward is found in line with the Constitution and the rule of law.”
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