International Monetary Fund’s Mission Chief to Pakistan Nathan Porter has said that discussions with Pakistani authorities are underway “with the aim of quickly reaching an agreement on financial support from the IMF”.
“Over the past few days, the Pakistani authorities have taken decisive measures to bring policies more in line with the economic reform programme,” he said in a statement on Tuesday.
The measures include the passage of a budget by the parliament that broadens the tax base while opening up space for higher social and development spending as well as steps towards improving the functioning of the foreign exchange market and tightening monetary policy to reduce inflationary and balance of payment pressures that affect particularly the more vulnerable,” the statement added.
“The IMF team continues discussions with Pakistani authorities with the aim of quickly reaching an agreement on financial support from the IMF,” the official added. The statement came hours after Prime Minister Shehbaz Sharif said that Pakistan expects a decision on the IMF stalled bailout programme within a day or two as the struggling country continues to meet the lender’s demands. The prime minister expressed hope after his telephone call with IMF Managing Director (MD) Kristalina Georgieva – his fourth contact with the lender’s boss in six days.
The premier spoke to the IMF chief over the phone earlier in the day after meeting her thrice – from Thursday to Saturday – on the sidelines of the New Global Financial Pact summit held in Paris, France.
The PM’s Office released a statement that the IMF chief and the prime minister discussed matters related to the stalled bailout programme. On the call, the IMF chief acknowledged Finance Minister Ishaq Dar and his team’s efforts for attempting to revive the loan – after policy matters were discussed in Paris. PM Shehbaz expressed hope that coordination on the points of the bailout programme would lead to a decision from the Washington-based lender in a day or two.
“The prime minister also reiterated his determination to achieve the goals of improving the economic situation through joint efforts,” the statement read.
The statement added that while hoping Pakistan’s economic situation would improve, the IMF chief appreciated the prime minister’s determination. 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.
