By Staff Reporter
ISLAMABAD: The International Monetary Fund said on Thursday that it was looking forward to engaging with the new government on policies to ensure “macroeconomic stability and prosperity for all of Pakistan’s citizens,” after the country held a disputed parliamentary election earlier this month.
The statement came amid uncertainty over the formation of the next government, as the party of former prime minister Imran Khan rejected the results of the vote and accused the caretaker government and military of rigging the election in favour of Pakistan Muslim League Nawaz.
Pakistan, a nuclear-armed nation of 220 million people, faces a looming economic crisis, as it struggles to repay its foreign debt, control inflation, and revive growth. The country averted default last summer thanks to a short-term $3 billion bailout from the IMF, but the program expires in April and a new government will have to negotiate a long-term arrangement to keep the economy stable.
During a press briefing, Julie Kozack, the head of the Communications Department at the IMF, was asked about whether Pakistan was on track to secure the third tranche of the stand-by agreement reached in June 2023.
She was also asked whether the IMF would entertain any letter by Khan calling for investigations into election irregularities.
“On January 11, the IMF Executive Board approved the first review of the Stand-By Arrangement with Pakistan that brought total disbursements under the Stand-By Arrangement to $1.9 billion. The Stand-By Arrangement is supporting the authority’s efforts to stabilize the economy and to, of course, with a strong focus on protecting the most vulnerable,” Kozack said in her response.
She said that during the tenure of the interim government, the authorities had “maintained economic stability.”
“This has been done through strict adherence to fiscal targets while also protecting the social safety net. It has been done by maintaining a tight monetary policy stance to control inflation and to continue to build up foreign exchange reserves.”
“We look forward to working with the new government on policies to ensure macroeconomic stability and prosperity for all of Pakistan’s citizens. And I am going to leave it at that,” she said.
Asked to specifically comment on a possible letter by Khan, she said, “I’m not going to comment on ongoing political developments. So, I don’t have anything else to add to what I just said.”
Pakistan had secured a $3 billion Stand-by Arrangement last year in June with an immediate disbursement of $1.2 billion to help the country narrowly avoid default. On January 11, the IMF’s executive board completed its first review of the country’s economic reform program, allowing for the release of $700 million. This brought total disbursements under the program to $1.9 billion.
The current IMF program is expected to conclude in the second week of April. Pakistan plans to seek a new loan of at least $6 billion from the International Monetary Fund to help the incoming government repay billions in debt due this year. The country will seek to negotiate an Extended Fund Facility with the IMF and the talks with the global lender were expected to start in March or April.
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