ISLAMABAD: International Monetary Fund (IMF) is still rigid over its conditions so that the talks for ninth review between Pakistan and the are still facing suspension and the fund is pushing Islamabad on policies and reforms needed to keep the bailout program’s targets on track and complete the pending ninth review.
“Key purpose of program reviews in Pakistan, as in all program countries, is to evaluate both program performance to date, as well as, forward-looking, whether the program is on track or policy measures are needed to meet program targets, advance reform objectives, and maintain macroeconomic stability going forward,” said an officials of the IMF.
An IMF review for the release of the next tranche under bailout funding has been pending since September. However, Finance Minister Ishaq Dar claimed last week that Pakistan met all targets for the review.
However, the IMF official said discussions with the Pakistani “authorities in these areas are ongoing, especially as not all end-September quantitative targets have been met”.
“Significant new developments have taken place since the last program review including the extraordinary floods and a number of new measures and developments, which affect this year’s economic outlook,” the official added.
Sources, privy to the talks were of the view that the global lender has communicated to the finance ministry that it requires completion of all end-quarter performance criteria and targets.
“Both sides would also require broader agreement on forward-looking data on the basis of which the performance targets and indicative targets for the remaining program period till June 2023 will be set,” they added.
Following the catastrophic floods, IMF and Pakistan had revised all macroeconomic and fiscal frameworks were adjusted altogether so both sides could strike a consensus on it.
The broader agreement on the revised macroeconomic framework could pave the way for evolving consensus on a staff-level agreement for the completion of the 9th review under the $7 billion Extended Fund Facility (EFF).
With the revised figure of nominal growth in the range of 25%, the tax-to-GDP ratio was bound to decline if the FBR achieved its annual target of Rs7.47 trillion for the current fiscal year. Without agreement on revised figures, it would be difficult for striking an agreement between the two sides.
Pakistani authorities are still hopeful that soon the 9th review would be accomplished paving the way for the release of the next tranche of around $1 billion for Pakistan’s struggling economy, Geo News reported.
Amid dwindling foreign exchange reserves that touched $7.5 billion, Pakistan requires dollars inflows injection in order to get breathing space.
With the possibility of more deposits from a friendly country, the authorities will become in a position to negotiate a better deal with the IMF but if no deposit materialised within the next couple of weeks then the foreign exchange reserves might further deplete in weeks ahead.
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