IMF disputes the government’s claim that it has complied with loan terms.
The forthcoming mission budget, according to a mission official, has to be disclosed.
With respect to the $1.2 billion 9th review of the bailout program, the International Monetary Fund (IMF) said on Friday in ISLAMABAD that it will be finished once the requisite money is in place and the agreement is confirmed.
The government’s claim that it has taken all required steps to finish the 9th review has been called into question by the statement supplied to The Express Tribune, highlighting a growing trust gap between Pakistan and the IMF.
The global lender also wants the government to be satisfied with the measures it intends to implement, notably the budget for fiscal year 2023-24, which the finance ministry officials say is shifting the goalposts.
“The IMF continues to work with the Pakistani authorities to bring the 9th review to a conclusion once the necessary financing is in place and the agreement is finalised,” said Nathan Porter, the IMF’s Mission Chief to Pakistan.
According to Prime Minister Shehbaz Sharif and Finance Minister Ishaq Dar, there was no reason to delay obtaining a staff-level agreement because Pakistan had fulfilled all the prerequisite conditions.
Finance Minister Ishaq Dar said, “Pakistan has already complied with all the prior actions for the 9th review with the IMF,” in an article published in an English day on Thursday. Dar also noted that the IMF board was expected to approve the 9th review shortly after the signing of the staff level agreement.
Since the face-to-face discussions broke down on February 9, the Pakistani authorities have been asserting that nothing concrete was accomplished.
The 9th review for Pakistan’s $1.2 billion loan tranche has been delayed for seven months. Nathan did not elaborate on how much money Pakistan has to put in place to finish the review.
In order to make ends meet until June of this year, Pakistan’s finance minister estimated that country will require $6 billion. Pakistan has received only partial loan guarantees, with only $3 billion guaranteed by Saudi Arabia and the UAE.
At now, Pakistan has $4.5 billion in total official foreign exchange reserves. Up until this June, the country must pay nearly $4 billion in principal and interest on debt to the world, including China’s $1 billion SAFE deposit.
According to the sources, Pakistan has to arrange cash to repay the loans during the first half of the next fiscal year because the government does not have a realistic funding strategy for the period of July-December.
According to the Finance Ministry, total interest and principal payments on external debt for the period of July through December were $11 billion. Over $4 billion will be needed to repay international creditors by Pakistan during the first half of the next fiscal year, and that’s assuming China and Saudi Arabia rollover their short-term commitments. The World Bank, the Asian Development Bank, the Saudi Fund for Development, the Islamic Development Bank, and commercial banks in China are all recipients of such funds.
In his remarks, Nathan Porter also brought up the upcoming fiscal year’s budget, which the government plans to unveil on or around June 10. According to Porter, “the IMF supports the authorities in the implementation of policies in the period ahead, including in the technical work to prepare the fiscal 2024 budget, which is to be passed by the National Assembly before end-June.”
The Ministry of Finance appeared frustrated by the IMF’s latest requirement, given that it was already working hard to achieve other conditions. Top-level finance ministry officials argued that the IMF’s approval of the 9th review shouldn’t depend on the upcoming fiscal year’s spending plan.
They suggested talking about the budget for FY2023-24 during the upcoming 11th review meeting. An anonymous member of the cabinet expressed concern over the IMF’s demand.
The stalled $6.5 billion IMF plan will end in less than two months. Pakistan and the IMF don’t seem likely to finish the remaining three evaluations of the programme at a mutually convenient time.
Despite a nine-month extension in the scheme granted by previous finance minister Miftah Ismail, $2.6 billion out of the $6.5 billion remain undisbursed due to Pakistan’s failure to complete the programme requirements on time.
According to those familiar with the matter, the finance secretary recently requested that Nathan Porter reevaluate the need for a budget agreement for the coming year.
The IMF may not provide much relief to Pakistan, especially given the government’s conflicting statements over the fulfilment of the conditions.
A politically motivated budget could be unveiled by the coalition administration, making it more challenging to pull the country out of its economic turmoil.
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