Pakistan Nears Signing of Tightly-Negotiated IMF Bailout Package
After months of intense negotiations between the Pakistani government and the International Monetary Fund (IMF), a significant breakthrough has been achieved, according to a report by Geo News on Saturday. Insider sources reveal that an official announcement regarding the signing of the deal is expected to be made soon.
Meeting Between Prime Minister Shehbaz Sharif and IMF Managing Director Kristalina Georgieva
The recent development follows a series of meetings between the two parties, particularly the meeting between Prime Minister Shehbaz Sharif and IMF Managing Director Kristalina Georgieva in Paris earlier this week. The meeting took place during the Global Financing Summit and occurred just a week before the expiration of the IMF’s Extended Fund Facility (EFF) on June 30, 2019.
Securing Funding under the Ninth Review of the $6.5 Billion EFF
As part of the ninth review of the $6.5 billion Extended Fund Facility, which was concluded earlier this year, Pakistan has been striving to secure $1.1 billion of funding that has been stalled since November. The sources indicate that the obstacles impeding the conclusion of the ongoing review have been resolved through several sessions between the lender and the government’s team over the past three days.
Consensus Reached between the IMF and Pakistan’s Government
The sources affirm that discussions and preparations for a new draft have continued until today, resulting in a consensus between the IMF and Pakistan’s government. Finance Minister Ishaq Dar and his team engaged in multiple rounds of talks with the lender to address concerns regarding the budget for 2023-2024. It is expected that the review will be completed expeditiously as the two sides have finalized the new draft.
Critical Need for IMF Funding to Alleviate Pakistan’s Balance of Payment Crisis
Pakistan is currently facing a severe balance of payment crisis, with its central bank foreign exchange reserves barely sufficient to cover one month of controlled imports. Analysts warn that this crisis could escalate into a debt default if the anticipated IMF funds do not materialize. Furthermore, the IMF’s financial support plays a pivotal role in unlocking other bilateral and multilateral financing opportunities for Pakistan.
Pakistan’s Frustration Over Delay and Commitment to Address Concerns
The delay in securing the IMF funds has left Islamabad frustrated, as it asserts that it has implemented all the necessary fiscal measures requested by the lender. However, the Washington-based institution still harbors concerns regarding Pakistan’s external financing gap, foreign exchange market operations, and the budget presented earlier this month, which it believes deviates from the program’s objectives. Pakistan, while defending the budget, has expressed its willingness to review it in further talks with the IMF.
In conclusion, the recent breakthrough in negotiations between the IMF and the Pakistani government brings hope for the signing of the tightly-negotiated bailout package. This agreement is crucial for Pakistan to address its balance of payment crisis, unlock additional financing opportunities, and stabilize its economy.