Pakistan says no ‘Plan B’ if IMF deal fails

Pakistan says no ‘Plan B’ if IMF deal fails

By Staff Reporter

ISLAMABAD: Pakistan has no backup plan if the International Monetary Fund (IMF) does not resume its $6.5 billion loan program, which has been on hold since September last year due to differences in next fiscal year’s external financing needs of the country, a minister said on Thursday.

“There are no alternative options being considered under Plan B in the event of the Fund program failing to revive,” Minister of State for Finance Aisha Ghaus Pasha told a parliamentary committee. “The government remains fully committed to reviving the program by completing the pending 9th review.”

The minister said the IMF had not accepted Pakistan’s assessment of a financing gap of $4.5 billion for the current fiscal year, which ends on June 30. The IMF has projected a financing gap of $6 billion.

“We have requested the Fund to reduce the external financing needs because the current account deficit was significantly curtailed besides other measures,” Ghaus Pasha said.

Additionally, the Fund was informed that the government has arranged $4 to $4.5 billion with $2 billion assurance from Saudi Arabia, $1 billion by the UAE, as well as $450 million by the World Bank and $250 million by the Asian Infrastructure Investment Bank (AIIB).

The remaining were expected through Geneva pledges in the aftermath of flood assistance.

“However, the IMF did not agree to reduce the external financing needs to $3 billion.”

Dr Ghaus Pasha said the government shared the budgetary framework for the next fiscal year with the IMF and has been waiting for their response.

She said the government paid back $3 billion to commercial banks with the understanding that it would get these loans re-financed once the Staff-Level Agreement (SLA) is done. “We also expect that after the revival of the IMF program other avenues of securing dollars will also open up.”

The ongoing IMF program is going to expire on June 30, 2023, after 28 days so the time is limited for completion of the pending 9th review.

If the staff-level agreement strikes by evolving broader consensus on three contentious issues including external financing, budgetary framework, and sticking to the free-market exchange rate then the program will be revived otherwise the program will be met with failure.

In such a scenario Pakistan would be left with no other option but to seek another IMF program next fiscal year keeping in view debt external repayments of $25 billion.

Copyright © 2021 Independent Pakistan | All rights reserved

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Pakistan says no ‘Plan B’ if IMF deal fails

By Staff Reporter

ISLAMABAD: Pakistan has no backup plan if the International Monetary Fund (IMF) does not resume its $6.5 billion loan program, which has been on hold since September last year due to differences in next fiscal year’s external financing needs of the country, a minister said on Thursday.

“There are no alternative options being considered under Plan B in the event of the Fund program failing to revive,” Minister of State for Finance Aisha Ghaus Pasha told a parliamentary committee. “The government remains fully committed to reviving the program by completing the pending 9th review.”

The minister said the IMF had not accepted Pakistan’s assessment of a financing gap of $4.5 billion for the current fiscal year, which ends on June 30. The IMF has projected a financing gap of $6 billion.

“We have requested the Fund to reduce the external financing needs because the current account deficit was significantly curtailed besides other measures,” Ghaus Pasha said.

Additionally, the Fund was informed that the government has arranged $4 to $4.5 billion with $2 billion assurance from Saudi Arabia, $1 billion by the UAE, as well as $450 million by the World Bank and $250 million by the Asian Infrastructure Investment Bank (AIIB).

The remaining were expected through Geneva pledges in the aftermath of flood assistance.

“However, the IMF did not agree to reduce the external financing needs to $3 billion.”

Dr Ghaus Pasha said the government shared the budgetary framework for the next fiscal year with the IMF and has been waiting for their response.

She said the government paid back $3 billion to commercial banks with the understanding that it would get these loans re-financed once the Staff-Level Agreement (SLA) is done. “We also expect that after the revival of the IMF program other avenues of securing dollars will also open up.”

The ongoing IMF program is going to expire on June 30, 2023, after 28 days so the time is limited for completion of the pending 9th review.

If the staff-level agreement strikes by evolving broader consensus on three contentious issues including external financing, budgetary framework, and sticking to the free-market exchange rate then the program will be revived otherwise the program will be met with failure.

In such a scenario Pakistan would be left with no other option but to seek another IMF program next fiscal year keeping in view debt external repayments of $25 billion.

Copyright © 2021 Independent Pakistan | All rights reserved