By Staff Reporter
ISLAMABAD: Pakistan is awaiting a decision on a stalled bailout programme from the International Monetary Fund (IMF), which said on Tuesday it was holding talks authorities with the aim of “quickly reaching an agreement”.
Prime Minister Shehbaz Sharif said on Tuesday he was hopeful that the IMF would make its decision in a day or two on the fate of the much-needed $6.5 billion bailout package for the country.
The prime minister expressed hope after his telephone call with IMF Managing Director Kristalina Georgieva, his fourth contact with the lender’s boss in six days.
The two also met last week on the sidelines of a global financing meeting in Paris.
The premier spoke to the IMF chief over the phone today after meeting her three times – from Thursday to Saturday – on the sidelines of the New Global Financial Pact summit held in Paris, France.
The IMF Mission Chief to Pakistan, Nathan Porter, said that over the past few days, “the authorities have taken decisive measures to bring policies more in line with the economic reform program”.
“These include the passage of a budget by the parliament that broadens the tax base while opening up space for higher social and development spending as well as steps towards improving the functioning of the foreign exchange market and tightening monetary policy to reduce inflationary and balance of payment pressures that affect particularly the more vulnerable,” Porter said in a statement.
“The IMF team continues discussions with Pakistani authorities with the aim of quickly reaching an agreement on financial support from the IMF.”
Islamabad has been waiting for a deal after taking policy and fiscal tightening decisions required by the IMF for the disbursal of $1.1 billion under the lender’s ninth review of the Extended Fund Facility agreed in 2019.
Finance Minister Ishaq Dar said in an interview to a local television channel on Tuesday that the government was searching for a mechanism to receive all pending funds under the IMF programme, which would amount to $2.6 billion.
Dar said that the IMF had demanded that the key policy rate be raised to 22 percent and that the review “will be done.”
The PM’s Office released a statement saying that the IMF chief and the prime minister discussed matters related to the stalled bailout programme.
On the call, the IMF chief acknowledged Minister Dar and his team’s efforts for attempting to revive the loan – after policy matters were discussed in Paris.
PM Shehbaz expressed hope that coordination on the points of the bailout programme would lead to a decision from the Washington-based lender in a day or two.
“The prime minister also reiterated his determination to achieve the goals of improving the economic situation through joint efforts,” the statement read.
The statement added that while hoping Pakistan’s economic situation would improve, the IMF chief appreciated the prime minister’s determination.
The South Asian nation is going through its worst economic crisis amid record inflation and interest rates, but it has seen prospects for its IMF loan take a positive turn before it expires at the end of the week.
In a dramatic final attempt to appease the lender, the nation agreed to raise taxes by $750 million and cut spending in its annual budget over the weekend.
Talks between Pakistan and the IMF stalled since December, after the global lender delayed the release of the crucial tranche of $1.1 billion from the bailout.
The deal envisioned a deadline and if the IMF by Friday decides that Pakistan has not met the terms of the agreement, the fund could cancel the whole bailout package.
Pakistan and the IMF have been at odds over what the fund says is Islamabad’s unsatisfactory compliance with the bailout conditions.
The cash-strapped Pakistani government is currently struggling to avoid a default with financial help from friendly countries such as China, Saudi Arabia, and the United Arab Emirates.
Rating agencies and economists fear that the $350 billion economy could default on its foreign debt obligations if it fails to secure the tranche.
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