Pakistan bailout package: Adding further woes to cash-strapped Pakistan, the International Monetary Fund (IMF) has delayed the signing of the coveted bailout package for Islamabad. According to the global lender, the talks between the two sides remained inclusive and discussions will continue virtually in the coming days.
In order to revive its fragile economy, Pakistan is in desperate need of financial assistance and a bailout package from the IMF. According to reports, Pakistan's foreign exchange has dropped below USD 3 billion.
From January 31 to February 9, an IMF mission led by Nathan Porter visited Islamabad to hold discussions under the ninth review of the authorities’ programme supported by the IMF Extended Fund Facility (EFF) arrangement. The Pakistan side was led by Finance Minister Ishaq Dar.
Porter said in a statement that the IMF team welcomes Pakistani Prime Minister Shehbaz Sharif's pledge to put policies in place to protect macroeconomic stability and expresses gratitude to the authorities for the fruitful discussions.
Virtual discussions will continue in the coming days: IMF
Considerable progress was made during the mission on policy measures to address domestic and external imbalances. Virtual discussions will continue in the coming days to finalise the implementation details of these policies,” he added
Key priorities include strengthening the fiscal position with permanent revenue measures and reduction in untargeted subsidies while scaling up social protection to help the most vulnerable and those affected by the floods, he said.
Among other priorities include allowing the exchange rate to be market determined 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 conveyed to the media at the conclusion of talks on Thursday evening that everything thing was settled and 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 Hamed Yaqoob Shaikh told the media that the two sides agreed on a set of prior actions but a staff-level agreement (SLA) on the Memorandum of Economic and Financial Policies (MEFP) was not signed yet.
“All issues have been settled and prior actions agreed upon,” said Shaikh, adding that the SLA would be finalised in the days to come. The IMF mission came to Pakistan after Islamabad agreed to take tough decisions, including restoring the market-based exchange rate and increasing petroleum prices.
In the first phase, Pakistan’s technical discussion with the IMF went on till February 3. It was followed by the second phase of policy negotiations that concluded on February 9 to finalise a memorandum of economic and financial policies. It should be mentioned here that Pakistan inked a USD 6 billion IMF programme in 2019, which last year expanded to USD 7 billion.
(With inputs from PTI)