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More delay in revival of IMF’s Pakistan programme likely

ISLAMABAD: Despite Pakistan’s efforts to win over the International Monetary Fund (IMF), it appears unlikely that the global lender will release the critical tranche for the country under the Extended Fund Facility (EFF) until May 17,

as the country’s loan programme is not on the agenda of the lender’s Executive Board meetings until then.

Since February, Pakistan and the IMF have been negotiating fiscal policy measures in the ninth review, with the goal of resuming blocked funding of $1.1 billion due in November from a $6.5 billion programme agreed in 2019.

Pakistan is attempting to strike an agreement with the Fund since other multilateral lenders have made the renewal of the IMF programme a condition for unlocking the money.

The IMF money is critical for Pakistan to avoid defaulting on its external payment obligations in the midst of a balance of payment crisis in which foreign exchange reserves have dwindled to just four weeks of controlled imports.

According to insiders, the global lender is dissatisfied with Pakistan’s friendly countries’ guarantees.

Officials from the finance ministry, speaking on the condition of anonymity, stated that Pakistan had met all of the lender’s requirements for the loan to be reinstated. They also stated that the staff-level agreement on the ninth review was to be reached by February 9.

They also stated that the IMF program’s delay is likely to have an impact on budget preparation, which is slated to be tabled in the second week of June.

Last week, Nathan Porter, the IMF’s mission chief in Pakistan, stated that the lender was working with Pakistan to complete the ninth assessment of the bailout plan.

“The IMF continues to work with the Pakistani authorities to complete the ninth review once the necessary financing is in place and the agreement is finalized,” said mission commander Nathan Porter in a statement to Reuters.

“The IMF will assist the authorities in implementing policies in the coming period.”

He noted that this includes technical work to create the budget for the fiscal year 2024, which is expected to be passed by the National Assembly before the end of June.

As part of the terms, Pakistan has guaranteed that its balance of payments deficit for the fiscal year ending in June will be fully covered.

Pakistan has announced $3 billion in financial support from Saudi Arabia and the United Arab Emirates, but the money has yet to arrive. China, a long-time ally, has rolled over and refinanced its loans.

The disparity has been a source of contention between Islamabad and the IMF. It was unclear whether the finance from Saudi Arabia, the United Arab Emirates, and China would be sufficient, or if additional external assistance would be required.

It was also unclear why the lender wanted to engage in technical budget preparation, which is not covered by the plan.

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