Pakistan government on track to conclude IMF review

Rebutting a report on Pakistan’s financing concerns, the finance ministry said the government remained on track to achieve its primary balance targets and conclude an upcoming review with IMF.


File photo of International Monetary Fund (IMF) logo. PHOTO: DAWN

September 21, 2023

ISLAMABADRebutting a report on Pakistan’s financing concerns, the finance ministry on Wednesday said the government remained on track to achieve its primary balance targets and conclude an upcoming review with the International Monetary Fund (IMF).

The IMF executive board had approved a $3 billion bailout programme for Pakistan in July of this year, with the arrangement coming during a challenging economic juncture for the cash-strapped government. An upcoming programme review is due for at the end of September.

Earlier today, a report said that a “nearly $4.5bn hole” had arisen in the country’s external financing plan and the budget may also “overshoot by another Rs1 trillion due to the understatement of debt expenditures”, adding that the two alleged developments could become a “serious issue” in the upcoming review.

“The sources said that against the budget estimates of over $20bn, there were concerns that at least $4.4bn foreign loans might not materialise,” the report stated.

Responding to the report, the finance ministry issued a statement on social media platform X saying that the Finance Division expected reporting on economic issues of national importance to be “responsible and not based on limited information”.

It said the report’s reference to a “potential overshoot” in the government’s interest expenditure on account of declining foreign inflows or a persistently high policy rate depicted a “limited understanding” of fiscal variables.

The finance ministry said the report “misrepresents” the country’s external financing requirements and interest payments for the current fiscal year.

It said the current budget’s figures were shared with the Fund while reaching the bailout agreement, adding that the ministry continued to work in close collaboration with the IMF and was monitoring progress on all actions under their agreement.

It further said that the Economic Affairs Division and development partners hold periodic portfolio reviews to monitor inflows from multilateral and bilateral sources while the ministry itself liaises with commercial banks on a regular basis. The ministry said that it expected to conclude its transactions under negotiations with the banks soon.

“The government remains committed to maintaining fiscal discipline throughout the course of the current fiscal year. It is being ensured that budget for FY2023-24 is strictly adhered to and that all expenditures remain in line with commitments.

“To this end, Finance Division remains engaged with all ministries/divisions as well as provincial governments to meet general government targets. Finance Division undertakes a review of the fiscal position frequently to ensure fiscal stability,” the ministry rebuttal reads.

Pakistan not considering action over Intercept’s IMF report: FO

Meanwhile, Foreign Office Spokesperson Mumtaz Zahra Baloch fielded questions on a very different report regarding the IMF earlier today.

Questioned about The Intercept‘s report linking the securement of the IMF programme with alleged Pakistani arms sales for Ukraine, she reiterated the FO’s stance that it was “baseless and fabricated”.

“The IMF standby arrangement for Pakistan was negotiated between Pakistan and the IMF and you all know that in the IMF board, there are multiple stakeholders. The decision to finalise the standby arrangement with Pakistan was taken by the IMF after the two sides agreed to implement certain difficult but essential economic reforms. Giving any other colour to these negotiations is disingenuous,” she said.

To a question about legal action against the report, Baloch said there was “no such consideration at this point.”

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