Pakistan set to resume talks with IMF next week to revive $6 billion loan package
Cash-strapped Pakistan is set to resume talks with the International Monetary Fund (IMF) next week for the revival of the USD 6 billion loan package, according to a media report on Sunday. As reported by The Express Tribune, a five-day round of technical discussions will virtually begin on October 4, with an IMF team from Doha, Qatar.
The successful completion of the talks will facilitate immediate disbursement of USD 1 billion by the IMF. Pakistan and the IMF had signed a USD 6 billion deal in July 2019, but the program got derailed in January 2020 and was reinstated sometime in March this year before getting derailed again in June.
There was no serious discussion between the two sides from June to August.
Sources said Finance Minister Shaukat Tarin was keen to end talks on a positive note during one-on-one meetings with top IMF management in Washington on October 15, the newspaper reported.
The IMF has yet to show its willingness for face-to-face meetings and has instead proposed virtual meetings for October 13 to 15. Therefore, the schedule of the policy-level talks is tentative and will be finalized next week, according to a finance ministry source.
The policy level talks are coinciding with the annual IMF-WB meetings to be held from 11 to 17 October. The embassy of Pakistan in Washington and the governor of the State Bank of Pakistan (SBP) are trying to physically get dates from the top management of the IMF. meeting.
The finance ministry did not respond to questions whether the October 13-15 round in Washington would also be held virtually.
The ministry also did not respond to another query regarding Pakistan’s request for a meeting with the managing director of the IMF. Finance Minister Tarin has already announced that he will visit Washington from October 12-17 to hold talks with the top management of the IMF on the sidelines of the annual meetings.
Sources said that during the recent talks, the finance ministry showed some leniency in accepting the IMF’s demands, as the four-month stalemate in talks was proving costly for the government, which was spending too much on foreign loans to keep afloat. is more dependent.
During the talks, both sides will try to find a middle ground on the contentious issue of hike in electricity prices.
During recent talks, the IMF pointed out that Pakistan would have to increase electricity tariffs, as the staff could not budge from their position in front of the management and the IMF board.
Another important question that will be decided in the coming two weeks is whether Pakistan wants to exit the IMF program in its original schedule of September 2022 or needs an extension to get the remaining USD 4 billion loan. Is.
According to the report, the government wants the IMF to advance the disbursement calendar and increase the size of loan installments.
Pakistan has earmarked 400 billion rupees or more than $ 3.1 billion from the IMF this fiscal year and its disbursement is possible only with the completion of the remaining reviews.
Another important area was the assessment of Pakistan’s gross financing needs amid a 373 per cent increase in the current account deficit during July-August this year as compared to the same period last year.
The IMF wants to see fiscal and monetary tightening policies adopted by Pakistan to reverse the increase in public debt and external sector stability.
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