The IMF urges Pakistan to address its trust deficit, and a global lender wants the nation to start economic reforms.
ISLAMABAD:
Pakistan’s economy faces a number of difficulties, according to the International Monetary Fund (IMF), including high inflation and interest rates as well as limited foreign exchange reserves.
At a recent virtual press briefing, Julie Kozack, the IMF’s director for strategic communications, emphasised this and mentioned discussions the organisation has been having with Pakistan. Naturally, all of this is a result of the disastrous floods.
The international lender, she continued, urged Pakistan’s government to start economic changes that would significantly aid in bridging the trust gap between the two sides.
Prior to renewing the package agreement, she advised getting guarantees from Pakistan’s external allies.
In order to conclude the ninth review of Pakistan’s Extended Fund Facility, discussions are still underway between IMF staff members and the Pakistani government. In order to support the authorities’ policy efforts and guarantee the effective conclusion of the review, timely financial help from external partners would be essential, she noted.
Julie also agreed that Pakistani authorities had begun taking strong measures to stabilise the economy and reestablish trust and were determined to making the required reforms.
According to her, the discussions with Pakistan also centred on creating room to address the needs associated with the floods, notably by increasing social assistance through the Benazir Income Support Programme.
The official responded, “At this moment, ensuring that there is sufficient finance to assist the authorities is of critical significance,” when asked what guarantees Pakistan wanted from its foreign partners.
Julie explained how these promises related to the IMF accord, saying that “a staff-level agreement would follow after the few outstanding items are resolved. Also, I can state that funding assurances—exactly what we’re asking for here—are a prerequisite for all IMF programmes.
She emphasised that in addition to IMF funding, Pakistan’s EFF-supported programme also got funding from the World Bank, the ADB, the AIIB, and bilateral partners, including China, Saudi Arabia, and the UAE.
The IMF representative made it clearly apparent that Pakistan would need to have such assurances in place for the agreement to be finalised by saying, “So, we do need to make sure that we have those funding assurances in place in order for us to be able to take the next step with Pakistan.”
