ISLAMABAD: Pakistan has been asked to present a repayment plan for a $3.7 billion loan to the International Monetary Fund (IMF) in June, according to media reports, thus delaying prospects of loan agreement, yet again.
The IMF has reportedly asked for stronger support from friendly nations and for Pakistan to present a plan to meet the commitment. Despite assurances from friendly countries, the IMF is still showing a lack of confidence and asking Islamabad to ‘do more’ to unlock the loan programme.
However, the IMF has reportedly not agreed to a proposal to exchange reserves equal to two months’ revenues, which would be valued between $11 to $12 billion. Funding will also not be available from international financial institutions until a staff-level agreement is reached with the IMF. The budget-making process can also be affected if transactions with the IMF are not concluded.
Media reports quoted sources within the Ministry of Finance have revealed that the government has imposed Rs. 170 billion in taxes through the mini-budget in a bid to secure a staff-level agreement with the IMF, which was originally scheduled for February 9. It is pertinent to mention here that the IMF issued the schedule of board meetings in which Pakistan is not included in any agenda until May 17.
The IMF’s lack of confidence in Pakistan’s economic situation may prove to be a challenge for the country, as the budget-making process could be affected if a staff-level agreement with the IMF is not reached. The need to present a repayment plan for the $3.7 billion loan in June and to demonstrate stronger support from friendly nations further adds to the challenges faced by Pakistan’s economic situation.
