January 27, 2023
ISLAMABAD – An International Monetary Fund (IMF) delegation will be visiting Islamabad from January 31 to February 9 to continue discussions regarding the ninth review of the $7 billion Extended Fund Facility (EFF), an official said on Thursday.
Pakistan entered a $6 billion IMF programme in 2019, which was increased to $7bn last year. The programme’s ninth review, which would release $1.18bn, is currently pending.
It had earlier been put off for two months due to the PML-N-led government’s unwillingness to accept certain conditions placed before it by the Fund, and the disagreements have yet to be resolved.
However, it is pertinent to mention that Prime Minister Shehbaz Sharif has indicated that the government is finally ready to swallow the bitter pill of the IMF’s “stringent” conditions to revive the loan programme.
In a statement released on Thursday, IMF Resident Representative for Pakistan Esther Perez Ruiz said: “At the request of the authorities, an in-person Fund mission is scheduled to visit Islamabad [from] January 31 – February 9 to continue the discussions under the ninth EFF review.”
She said that the mission would focus on policies to restore domestic and external sustainability, including to strengthen the fiscal position with durable and high quality measures while supporting the vulnerable and those affected by the floods; restore the viability of the power sector and reverse the continued accumulation of circular debt; and re-establish the proper functioning of the foreign exchange market, allowing the exchange rate to clear the forex shortage.
“Stronger policy efforts and reforms are critical to reduce the current elevated uncertainty that weighs on the outlook, strengthen Pakistan’s resilience, and obtain financing support from official partners and the markets that is vital for Pakistan’s sustainable development,” she said.
US help sought for IMF programme revival
On Wednesday, Pakistan sought the support of the United States in reviving the IMF programme to facilitate soft landing of its economy marred by exogenous challenges like floods and adverse global economic conditions.
Finance Minister Ishaq Dar asked a visiting US delegation to help convince the Washington-based multilateral lender to be lenient towards Pakistan in restoring the programme while understanding the challenges created by floods and other external factors.
Dar, according to informed sources, told the visitors that Pakistan would honour all its international commitments and was in the process of taking “very tough decisions”, including increasing the prices of natural gas and electricity and other measures “even beyond the call of IMF”, to put the country on path to stability through reforms.
However, he pointed out, Pakistan required breathing space as the industry and agriculture had passed through most challenging times after the devastating floods.
As the US team wanted to understand Pakistan’s challenges, including erosion of its currency, the minister explained that besides domestic issues, the rupee was also under pressure because of the smuggling of foreign currencies, particularly the US dollar, to Afghanistan and Iran where too the greenback was in short.