January 25, 2023
ISLAMABAD – Prime Minister Shehbaz Sharif said on Tuesday that Pakistan had given a “clear message” to the International Monetary Fund (IMF) about the country’s desire to complete the ninth review of the $7 billion Extended Fund Facility (EFF).
Addressing the launch of a loan scheme in Islamabad, the premier reiterated the government’s desire to complete the review.
“We have given the IMF a clear message that we want to complete the ninth review. We are ready and want to sit down regarding your conditions so that it can be concluded and Pakistan can move forward.”
He stated that Pakistan had been “given a clear message left and right” that the country would not be abandoned but that it was necessary for it to “stitch” the IMF programme.
PM Shehbaz said that the government had written to the international money lender. “I spoke to the IMF managing director two weeks ago and we have proactively approached them that we want to complete the ninth review without delay so that the programme moves forward, in addition to other multilateral and bilateral programmes.”
Islamabad is waiting for the ninth review of a loan-arrangement that the previous government signed with the IMF. The review would lead to the release of the next tranche of funds to Pakistan that has been pending since September.
The prime minister’s remarks come a day after it was reported that the government’s fear of losing popularity before the elections seems to be keeping Pakistan from finalising a deal with the IMF that could stabilise the economy.
Official and diplomatic sources told Dawn that both sides were still discussing the seven demands that the IMF wants Pakistan to accept before it resumes economic assistance to the country.
The demands include withdrawing electric subsidies, linking gas prices to the international market, free-floating dollars, and not blocking LCs.
The government “fears that implementing some of these demands will hike the price of essential items across the board,” a source said. “It will make the government even more unpopular than it already is, so close to the elections.”
IMF officials have indicated that they are willing to continue working with Pakistan, but the country should first meet some basic requirements.
“They are asking for basics, so that they can send their team to Islamabad, but the finance minister is reluctant to do so,” said an official aware of the talks.
The official said that the IMF was asking for “some movement on energy prices and the demonstration of Islamabad’s intent to reform but Finance Minister Ishaq Dar is not giving an inch.”
Officials in Islamabad urged PM Shehbaz to intervene before it’s too late. “This could have been finalised four months ago,” another official said.
The official said that he “does not personally expect much before a caretaker setup takes over the Centre.” Asked why, the official said: “Dar will not allow the exchange rate to go to market levels.”
And if “we do not have an IMF programme, the situation will not normalise,” he added.
Another official in Islamabad said: “If Pakistan waits for the caretakers to hold talks with the IMF, it will be a disaster.”