May 13, 2024
ISLAMABAD – Speaking to Dawn.com, Esther Perez Ruiz, the Fund’s resident representative for Pakistan, said: “A mission team led by Nathan Porter, IMF’s mission chief to Pakistan, will meet with authorities next week to discuss the next phase of engagement.
“The aim is to lay the foundation for better governance and stronger, more inclusive, and resilient economic growth that will benefit all Pakistanis,” she added.
Pakistan last month completed a short-term $3 billion programme, which helped stave off sovereign default, but the government has stressed the need for a fresh, longer-term programme.
Last week, the Fund said that a mission was expected to visit Pakistan this month to “discuss the FY25 budget, policies, and reforms under a potential new programme for the welfare of all Pakistanis”.
Pakistan narrowly averted default last summer, and the $350bn economy has stabilised after the completion of the last IMF programme, with inflation coming down to around 17 per cent in April from a record high 38pc last May.
The country is still dealing with a high fiscal shortfall and while the external account deficit has been controlled through import control mechanisms, it has come at the expense of stagnating growth, which is expected to be around 2pc this year compared to negative growth last year.
Pakistan is expected to seek at least $6bn and request additional financing from the Fund under the Resilience and Sustainability Trust.
On Friday, the Fund said that downside risks for the economy remain exceptionally high. “Downside risks remain exceptionally high. While the new government has indicated its intention to continue the SBAs (standby arrangement) policies, political uncertainty remains significant,” said the IMF in its staff report following the second and final review under the standby agreement.
The Fund added that political complexities and high cost of living could weigh on policy, adding that policy slippages, together with lower external financing, could undermine the narrow path to debt sustainability and place pressure on the exchange rate.
The IMF also said higher commodity prices and disruptions to shipping, or tighter global financial conditions, would also adversely affect external stability for the cash-strapped nation.
The fund stressed the need for timely post-programme external financing disbursements.