The International Monetary Fund (IMF) has asked the PDM government to provide external financing assurances before it takes the next step with Pakistan.
In a press briefing on Friday, Julie Kozack, the IMF’s Director of Strategic Communications stated: “Timely financial assistance from external partners will be critical to support the authorities’ policy efforts and ensure the successful completion of the review [with Pakistan].
“Ensuring that there is sufficient financing to support the authorities is the paramount priority. A Staff Level Agreement (SLA) will follow once the few remaining points are closed,” she said.
The IMF official said that financing assurances are a standard feature of all IMF programs.
It should be noted that Pakistan and the IMF have been negotiating since early February on an agreement that would release $1.1 billion to the cash-strapped, nuclear-armed country of 220 million people.
“We do need to ensure that we have those financing assurances in place in order for us to be able to take the next step with Pakistan,” she added.
On the status of talks with Pakistan, Kozack said that discussions are ongoing between IMF staff and the Pakistani authorities toward a SLA on policies to complete the ninth review of Pakistan’s extended Fund Facility (EFF).
“The authorities are committed to implementing the necessary reforms. They’ve started to implement decisive actions to stabilize the economy and restore confidence. While providing space to accommodate the needs related to the floods, including through an increase in social assistance through the Benazir Income Support Program, which is aimed at the most vulnerable,” she said.
The IMF spokeswoman added that Pakistan’s economy confronts a number of difficulties, such as decreasing growth, high inflation, and significant financing requirements.
The South Asian nation has had a slew of problems, including a perceived default risk and downgrading by foreign rating agencies that reflect the health of the economy while also having to deal with significant political unrest and frequent changes in key leadership.
Earlier, International Monetary Fund (IMF) has said that the deal with Pakistan will be signed once a few remaining points, including a proposed fuel pricing scheme, are settled.
The latest issue is a plan, announced by Prime Minister Shehbaz Sharif last week, to charge affluent consumers more for fuel, with the money raised used to subsidize prices for the poor, who have been hit hard by inflation, which in February was at its highest in 50 years.
Petroleum Minister Musadik Malik told Reuters on Thursday that his ministry had been given six weeks to work out the pricing plan.
But the IMF’s resident representative in Pakistan, Esther Perez Ruiz, said the government did not consult the fund about the fuel pricing scheme.
Ruiz, in a message to Reuters, confirmed a media report that a staff-level agreement would be signed once a few remaining points, including the fuel scheme, were settled.
