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ISLAMABAD: Pakistan informed the United States on Wednesday that it remained committed to the International Monetary Fund (IMF) programme, despite the country’s reserves falling to half a month’s import cover following a $500 million loan repayment.
According to an official notice from the Ministry of Finance, Finance Minister Ishaq Dar met with Robert Kaproth, Deputy Assistant Secretary of the United States Department of Treasury for Asia.
Both parties discussed the status of the IMF programme throughout the meeting. Dar informed the US official about Pakistan’s efforts to restart the IMF programme.
“Despite difficult economic conditions, the administration is working on turning things around and implementing reforms in all sectors, especially the energy sector and the capital market, to achieve economic growth and development,” Dar told Robert.
The IMF has requested that Pakistan create a market-based currency rate, abolish import restrictions, and raise taxes and utility costs. However, the government has yet to implement any of these steps and is awaiting a formal engagement with the global lender before proceeding.
The conference took place amid a sharp reduction in foreign exchange reserves, which had fallen to their lowest level in almost nine years, with only two weeks of import cover.
Pakistan paid $500 million to a Chinese commercial bank last week, reducing reserves to levels that cannot be considered as comfortable by any definition.
Pakistan’s monthly import bill is approximately $5.3 billion, and reserves were less than $3.3 billion on Tuesday. Pakistan is expecting certain disbursements by Chinese financial institutions shortly, while it also awaits the $2 billion Saudi cash deposit “much before the end of January”.
Prime Minister Shehbaz Sharif directed the Ministry of Finance this week to restart the IMF programme as soon as possible, with the condition that low-income families be exempted from the burden that the nation will have to bear in due course.
The finance minister informed the US deputy assistant treasury secretary that Pakistan would fulfil its international debt obligations and, as a result, would not pursue Paris Club debt restructuring. Dar also noted in the meeting that Islamabad had paid its debts on schedule.
Previously, the finance minister requested US assistance to soften the IMF’s stance, but the world’s largest economy recommended Pakistan follow the road of budgetary restraint.
