Pakistan agrees to share budget details with IMF to unlock stalled programme

Finance Minister Ishaq Dar announced that the coalition government has agreed to discuss details of its next budget with the International Monetary Fund (IMF) in order to unlock the frozen money.

“They have asked us for some more details, like the details of (the) budget, and we will give that to them,” Dar said on Jirga on Sunday.

He emphasised that the government had met all of the conditions imposed by the Washington-based lender in order to restart the stalled $6.5 billion programme, and he encouraged the global lender to deliver the cash before the next federal budget, which is due next month.

The financial czar said some powers do not want economic stability in Pakistan and blamed the previous Pakistan Tehreek-e-Insaf (PTI) government for “destroying” the country’s economy.

“Record inflation was witnessed during Imran Khan’s tenure,” he said, adding that the former prime minister did not honor the agreement with the IMF.

The IMF’s $1.1 billion funding to Pakistan, which is part of the $6.5 billion rescue package agreed in 2019, has been held up since November.

The IMF and Pakistan held two weeks of talks in February in Islamabad to conclude the 9th review, but the lender has not yet released the money, which is critical for the country to unlock other bilateral and multilateral financings.

The federal minister also stated that he would like the IMF to disburse the funds before the budget is announced in early June. “We will not do the 9th and 10th reviews together,” he stated. This is unfair.”

Pakistan is attempting to resurrect the stalled Extended Fund Facility (EFF) agreement with the IMF.

The hopes are dwindling by the day, owing to the fact that the EFF’s ongoing $6.5 billion plan will expire on June 30.

The talks between Pakistan and the IMF are still ongoing in order to complete the ninth review, which was due on November 3 of last year. The formal negotiations began on January 31, when an IMF delegation arrived in Pakistan for face-to-face meetings.

However, the two sides were unable to achieve an agreement during the scheduled meetings, which ended on February 9. Multiple online sessions have been held since then, but the discrepancies in criteria specified by the Fund for the Staff Level Agreement (SLA) remain.

If the SLA is not reached before the upcoming budget for 2023-24, which is set to be released on June 9, the ongoing programme would fail.

“There are a few options for moving forward.” The first is by signing the SLA immediately and presenting Pakistan’s request to the IMF Executive Board for approval of the next tranche of $1 billion, as well as securing a few months’ extension in the EFF programme period in order to complete the 10th and 11th Reviews,” sources familiar with the background discussions told the publication.

The second alternative would be to combine the 9th and 10th reviews, with Pakistan sharing upcoming budgetary figures with the IMF.

The SLA should then be signed following the announcement of the budget, and if it is approved by parliament, the IMF’s Executive Board could sanction combined tranches as well as give an extension to the EFF programme in order to complete the 11th Review by July or August 2023.

“There are no easy options; both sides must work out modalities for evolving consensus.” However, no breakthrough can be accomplished with the current policy of maintaining the status quo,” said the official, who spoke on the condition of anonymity.

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