IMF delays bailout package for cash-strapped Pakistan
Islamabad, Feb 10 (EFE).- Staff-level talks between Pakistan and the International Monetary Fund in Islamabad ended on Thursday without an agreement, further delaying the disbursement of $1.2 billion in funding critical to the South Asian country to avoid a debt default.
“The 10-day dialogue has positively concluded…it will obviously take a few days,” Pakistan’s Finance Minister Ishaq Dar said at a press conference on Friday.
Dar said the government had received the Memorandum of Economic and Financial Policies (MEFP) from the IMF, a key document that describes all the conditions, steps and policy measures on the basis of which the two sides declare the staff-level agreement.
“I am confirming that the MEFP draft has been received by us at 9 am today,” he added.
“We will completely go through the (MEFP) over the weekend and will start virtual talks from Monday,” the minister said.
An IMF mission led by Nathan Porter visited Islamabad between Jan. 31 and Feb. 9 to hold discussions under the ninth review of the agency’s $7 billion Extended Fund Facility program.
“Considerable progress was made during the mission on policy measures to address domestic and external imbalances,” Porter said in a statement at the end of the visit.
He added that virtual discussions will continue in the coming days to finalize the implementation details of certain policies, including strengthening the fiscal position with permanent revenue measures and reduction in untargeted subsidies, while scaling up social protection to help the most vulnerable and those affected by the floods.
The finance minister acknowledged that the IMF’s demand for reforms in certain sectors were in Pakistan’s interest.
“There are some sectors where reforms are needed and we cannot afford that Pakistan’s economy continues bleeding,” Dar said.
He added that once the MEFP is finalized, the IMF has its own internal process and then a board meeting is held.
Once the approval is given by the board, the tranche is disbursed.
Pakistan is facing severe economic challenges, including a balance-of-payment crisis and shrinking foreign exchange reserves, which fell to $2.916 billion last week and are enough for only 16 or 17 days of imports, according to experts.
Inflation rate jumped to a 48-year high of 27.6 percent in January compared to the same period last year, the Pakistan Bureau of Statistics said.
The dollar-strapped nation secured a $6 billion IMF bailout in 2019 which was increased by another $1 billion last year following historic floods in the country.
The IMF had suspended disbursements in November last year due to the government’s failure to meet the agency’s demands. EFE