IMF sets three conditions for Pakistan to release stuck up funds

By Staff Reporter

ISLAMABAD: The International Monetary Fund (IMF) said on Thursday Pakistan must meet three conditions before its board can review whether to release at least some of the $2.5 billion still pending under a lending program expiring this month.

Esther Perez Ruiz, the International Monetary Fund’s resident representative for Pakistan, said there was only time for one last IMF board review before the end of the $6.5 billion Extended Fund Facility (EFF) at the end of June.

“To pave the way for a final review under the current EFF, it is essential to restore the proper functioning of the FX market, pass a FY24 Budget consistent with programme objectives, and secure firm and credible financing commitments to close the $6 billion gap ahead of the Board,” Perez Ruiz said.

The IMF had tasked Pakistan with securing external financing commitments for $6 billion from other sources, but so far it has only obtained commitments for $4 billion, mostly from Saudi Arabia and the United Arab Emirates.

Under pressure to shift to a more market-determined exchange rate regime and shut down an unofficial currency market, Pakistan removed daily limits on fluctuations earlier this year, but analysts suspect the authorities are still trying to manage the exchange rate, fearing the rupee could fall too far.

Perez Ruiz laid out the IMF’s broad expectations for the upcoming budget.

“The focus of discussions over the FY24 budget is to balance the need to strengthen debt sustainability prospects while creating space to increase social spending,” she said.

More such spending would defray the impact of inflationary pressures on Pakistan’s most vulnerable people, Perez Ruiz added, but the government needed make more progress to identify spending and revenue-generating measures to achieve this.

The government has said it is committed to meet the IMF’s requirements. However, there are concerns that the government may not be able to pass a budget that is both convincing to the IMF and acceptable to the Pakistani people.

The government has taken a number of steps to address these challenges, including raising taxes, cutting subsidies, and devaluing the rupee. It remains to be seen whether the government will be able to pass a budget that is both convincing to the IMF and acceptable to the Pakistani people.

Copyright © 2021 Independent Pakistan | All rights reserved

IMF sets three conditions for Pakistan to release stuck up funds

IMF sets three conditions for Pakistan to release stuck up funds

By Staff Reporter

ISLAMABAD: The International Monetary Fund (IMF) said on Thursday Pakistan must meet three conditions before its board can review whether to release at least some of the $2.5 billion still pending under a lending program expiring this month.

Esther Perez Ruiz, the International Monetary Fund’s resident representative for Pakistan, said there was only time for one last IMF board review before the end of the $6.5 billion Extended Fund Facility (EFF) at the end of June.

“To pave the way for a final review under the current EFF, it is essential to restore the proper functioning of the FX market, pass a FY24 Budget consistent with programme objectives, and secure firm and credible financing commitments to close the $6 billion gap ahead of the Board,” Perez Ruiz said.

The IMF had tasked Pakistan with securing external financing commitments for $6 billion from other sources, but so far it has only obtained commitments for $4 billion, mostly from Saudi Arabia and the United Arab Emirates.

Under pressure to shift to a more market-determined exchange rate regime and shut down an unofficial currency market, Pakistan removed daily limits on fluctuations earlier this year, but analysts suspect the authorities are still trying to manage the exchange rate, fearing the rupee could fall too far.

Perez Ruiz laid out the IMF’s broad expectations for the upcoming budget.

“The focus of discussions over the FY24 budget is to balance the need to strengthen debt sustainability prospects while creating space to increase social spending,” she said.

More such spending would defray the impact of inflationary pressures on Pakistan’s most vulnerable people, Perez Ruiz added, but the government needed make more progress to identify spending and revenue-generating measures to achieve this.

The government has said it is committed to meet the IMF’s requirements. However, there are concerns that the government may not be able to pass a budget that is both convincing to the IMF and acceptable to the Pakistani people.

The government has taken a number of steps to address these challenges, including raising taxes, cutting subsidies, and devaluing the rupee. It remains to be seen whether the government will be able to pass a budget that is both convincing to the IMF and acceptable to the Pakistani people.

Copyright © 2021 Independent Pakistan | All rights reserved

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