Pakistan bailout package: Adding to the woes of cash-strapped Pakistan, the International Monetary Fund (IMF) has delayed signing off on the coveted bailout package for Islamabad. According to the global lender, the talks between the two sides have been inclusive and discussions will virtually continue in the coming days.
To revive its fragile economy, Pakistan is in dire need of financial aid and a bailout package from the IMF. According to reports, Pakistan’s foreign exchange has come down below three billion dollars.
From 31 January to 9 February, an IMF mission led by Nathan Porter visited Islamabad to hold consultations as part of the Ninth Review of the Program of Officials supported by the IMF Extended Fund Facility (EFF) arrangement. The Pakistani side was led by Finance Minister Ishaq Dar.
Porter said in a statement that the IMF team welcomes Pakistani Prime Minister Shehbaz Sharif’s determination to develop policies to protect macroeconomic stability and expresses gratitude to the officials for the fruitful discussions.
Virtual discussions will continue in the coming days: IMF
Significant progress was made during the mission on policy measures to address domestic and external imbalances. The virtual discussions will continue in the coming days to finalize the details of the implementation of these policies.
He said key priorities include strengthening the fiscal position with sustainable revenue measures and reducing untargeted subsidies, while enhancing social protection to help the most vulnerable and affected by floods.
Other priorities include allowing the exchange rate to be determined by the market in order to gradually eliminate the foreign exchange shortage; and enhancing energy provision by preventing further accumulation of circular debt and ensuring the viability of the energy sector.
However, the Pakistan government initially told the media at the conclusion of talks on Thursday evening that everything had been decided and that Dar would announce the details at a press conference.
Staff level agreement yet to be signed
But the conference was postponed and instead Finance Secretary Hameed Yaqoob Sheikh told the media that the two sides agreed on a set of pre-actions but a staff-level agreement (SLA) on the Memorandum of Economic and Financial Policies (MEFP). It was not signed yet. ,
“All issues have been resolved and ex-post facto actions have been agreed upon,” Sheikh said, adding that the SLA would be finalized in the coming days. The IMF mission came to Pakistan after Islamabad agreed to restore market-based exchange rate and take tough decisions including hike in petroleum prices.
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In the first phase, Pakistan’s technical discussion with the IMF lasted till 3 February. This was followed by the second round of policy talks, which concluded on 9 February to finalize a memorandum of economic and financial policies. It should be mentioned here that Pakistan signed a USD 6 billion IMF program in 2019, which increased to USD 7 billion last year.
(With inputs from PTI)