March 13, 2023
ISLAMABAD – Pakistan has seemingly been on the verge of signing the much-anticipated staff-level agreement with the International Monetary Fund (IMF) for several weeks now, but the coming week may see the finance minister “close the deal”, sources in the finance ministry told Dawn.
The government has been sticking to its line of “very soon”, and a finance ministry official said that Finance Minister Ishaq Dar would resume the final round of talks with the lender tomorrow (Monday).
Earlier this week, Mr Dar said the government would sign a staff-level agreement with the Fund in a few days.
The finance ministry official said the deal couldn’t be signed this weekend because of delays in compliance with certain measures from the State Bank of Pakistan (SBP).
Islamabad hosted an IMF mission in early February to negotiate the terms of a deal, including the adoption of policy measures to manage its fiscal deficit ahead of the annual budget due around June.
Finance ministry official says last prior actions completed by SBP, compliance reports shared with lender
Since then, Mr Dar has been consistently saying that the deal would be signed soon. On Thursday, he said the country was “very close” to signing the staff-level agreement.
However, the official said the central bank had now completed the last prior actions, and its compliance reports were subsequently shared with the IMF.
Meanwhile, all prior actions to be taken by the finance and energy ministries and the Federal Board of Revenue (FBR) were also completed and shared with IMF officials.
The official said Mr Dar would now hold virtual talks with the IMF team, led by its mission chief to Pakistan, Nathan Porter, to finalise the deal.
“We have almost completed all prior actions and measures suggested by the IMF,” the official said, adding that the staff-level agreement was expected on Monday or Tuesday.
An agreement would release $1.1 billion, which is part of a $6.5bn bailout package the IMF approved in 2019, which analysts say is critical if Pakistan is to avoid defaulting on external debt obligations.
The SBP’s foreign exchange reserves, after falling below $3bn, have now reached $4.3bn, following inflows of about $1.5bn over the past one and a half weeks.
According to the official, the delay in signing the key IMF agreement had created uncertainty, especially among importers, as the deal is expected to help the rupee gain Rs10-15 against the dollar.
The rupee closed at 280.77 against the US currency on Friday.
The Federal Board of Revenue also believes that import tax collection would improve once the containers stuck at ports were cleared.
Published in Dawn, March 12th, 2023