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The International Monetary Fund (IMF) stated on Tuesday evening that it aimed to “quickly” attain an settlement with Pakistan on monetary help from the worldwide lender as Islamabad had taken “decisive measures” to align its insurance policies with the financial reforms sought by the establishment.
“Over the past few days, the Pakistani authorities have taken decisive measures to bring policies more in line with the economic reform programme supported by the IMF,” the lender’s mission chief for Pakistan, Nathan Porter, stated in a press release.
These measures, he stated, included the passage of a funds by the parliament that broadened the tax base whereas opening up area for larger social and improvement spending, in addition to steps in the direction of bettering the functioning of the international change market and tightening financial coverage to scale back inflationary and balance-of-payment pressures that affected significantly the extra susceptible.
“The IMF team continues discussions with Pakistani authorities with the aim of quickly reaching an agreement on financial support from the IMF,” he added.
Porter’s assertion comes as Pakistan continues to barter with the IMF for the completion of a ninth overview of the $6.5 billion Extended Fund Facility agreed in 2019 and the discharge of a $1.2bn tranche.
The overview has been stalled since October and the federal government is now hopeful of its completion quickly with Prime Minister Shehbaz Sharif partaking with the IMF chief a number of occasions in current days.
‘Trying to get $2.6bn in pending funding’
Prior to Porter’s statement, Finance Minister Ishaq Dar said on Geo News show ‘Capital Talk’ that the government was working to find a mechanism to get the full $2.6 billion in pending finances under the IMF loan programme.
Dar expressed optimism that an agreement would be reached with the IMF for the release of the much-needed $1.2bn tranche, pointing out that a total of $2.6bn was “unspent” under the programme.
With the IMF programme set to expire on June 30, even after the completion of the ninth review, some amount would remain pending in funding under the programme as a tenth review seems out of question.
The minister said the government was hoping and trying not just to get $1.2bn pending funds following the completion of the ninth review but also to find a way out for the release of the entire pending amount of $2.6bn.
“It is my wish list,” he said, adding that “next one to two days are crucial”.
The finance minister also said in case an agreement was not reached with Pakistan, the government had prepared a “plan B”, but it would not be in the “national interest” to share further details on this.
Talks with IMF
Earlier this month, the IMF had raised several issues with Pakistan’s budget for fiscal year 2024, saying that some of the proposed measures went against the EFF programme’s conditionality.
Esther Perez Ruiz, IMF representative for Pakistan, had earlier said Pakistan needed to satisfy the IMF on three counts, including the budget for the upcoming fiscal year, before its board will review whether to release the pending tranche.
For its part, the government responded to the IMF’s concerns, saying that it was “flexible” on the budget and remained engaged with the international lender to reach an “amicable solution”.
Subsequently, the government last week made several changes to the next fiscal year’s budget, including fiscal tightening measures dictated by IMF in a last-ditch effort to secure critical funding.
“Pakistan and IMF had detailed negotiations for the last three days as a last effort to complete the pending review,” Finance Minister Ishaq Dar had said during a National Assembly session on Saturday in which he unveiled the changes.
The changes include Rs215bn additional tax measures, a Rs85bn spending cut, withdrawal of an amnesty on foreign exchange inflows, lifting of import restrictions, a Rs16bn hike in Benazir Income Support Programme allocations, and the powers to increase the petroleum levy from Rs50 to Rs60 per litre.
The revised budget was then passed by the Parliament and later also signed by Acting President Sadiq Sanjrani.
Meanwhile, PM Shehbaz held back-to-back meetings with the IMF chief in Paris last week and a phone call immediately.
A handout launched by the Prime Minister’s Office (PMO) immediately stated that the premier mentioned the IMF programme with the worldwide lender’s chief and the IMF director common acknowledged efforts by the finance minister and his group for completion of the programme.
PM Shehbaz expressed hope that coordination on the factors of the IMF programme would result in a choice from the worldwide lender in a day or two, the assertion added.
On Monday, an official instructed Dawn that “almost all the irritants between the IMF staff and the Ministry of Finance were addressed hours before the finance minister’s wind-up speech on Saturday”.
The official additionally stated that it was now as much as the IMF’s mission to line up the exact dates for the lender’s government board approval and disbursement of funds.
However, he acknowledged that it was not on the calendar till June 30, when the $6.5 billion Extended Fund Facility agreed in 2019 is ready to run out.
Additional enter from Reuters
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