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Pakistan to approach IMF for new programme

Photo taken on April 19, 2022 shows the IMF headquarters in Washington, D.C., the United States. (Photo by Ting Shen/Xinhua/IANS)

Sources said that the economic team has begun working on the agreement “which is expected to be tougher” than the existing programme agreed in 2019…reports Asian Lite News

Pakistan has decided to negotiate a new programme with the International Monetary Fund (IMF) immediately after the budget as the coalition government is planning to conclude the $6.5 billion Extended Fund Facility (EFF) without completing all the pending review.

The coalition government has been negotiating with the Washington-based lender to revive its bailout programme since November, with the financing gap among the biggest roadblocks. There’s about $2.5 billion left to disburse from the $6.5 billion programme that’s scheduled to expire on June 30, Geo News reported.

The sources said that while negotiations on the ninth review were almost complete, a staff-level agreement is yet to be reached. Even after this review completes, the 10th and 11th reviews will remain pending.

“Completion of both reviews before June 30 seems impossible and the government has decided against seeking an extension,” the sources said, adding that Ishaq Dar-led Ministry of Finance will approach the Fund for a new programme after budget – which is expected to be tabled on June 9, Geo News reported.

The sources further revealed that if the coalition government fails to complete the negotiations before its term ends in August, the caretaker government will hold talks with the Washington-based lender.

Disclosing some of the details of the new programme, the sources said that the economic team has begun working on the agreement “which is expected to be tougher” than the existing programme agreed in 2019 by the Pakistan Tehreek-e-Insaf (PTI) government, Geo News reported.

Moreover, they said that the new bailout programme will likely be for more than three years. “Pakistan will desperately need an IMF programme in September as the country needs to pay around $9-11 billion dollars in repayments of external debt by December 2023,” they added.

Meanwhile, Pakistan State Minister for Finance and Revenue Aisha Ghaus Pasha slammed the International Monetary Fund (IMF) for “intervening” in Pakistan’s internal matters, local media reported.

“Pakistan’s conduct is in line with the law,” the state minister said, terming IMF Mission Chief for Pakistan Nathan Porter’s statement – regarding the political situation in Pakistan – “extraordinary”.



While the IMF does not comment on domestic politics, Porter had said that the Fund hopes “a peaceful way forward is found in line with the Constitution and the rule of law”.

Hoping that both sides will reach a staff-level agreement before the announcement of the federal budget – expected to be unveiled on June 9 – for the fiscal year 2023-24, the state minister said that the delay is neither good for Pakistan nor the Fund.

Dr Pasha confirmed reports that Prime Minister Shehbaz Sharif contacted IMF Managing Director Kristalina Georgieva, adding that the premier assured the fund’s chief that Pakistan will meet all its obligations, Geo News reported.

On May 27, the Prime Minister contacted Georgieva, requesting her to help Pakistan revive the stalled $6.5 billion facility.

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Shehbaz: All IMF conditions met to revive loan deal

Pakistan secures over $ 10.5 bn in flood pledges

The Pakistan Prime Minister lamented that the coalition government was making all-out efforts to convince the IMF officials to release a tranche of $1.1 billion

Pakistan Prime Minister Shehbaz Sharif on Saturday emphasised that the country has met all “tough” conditions laid forth by the International Monetary Fund (IMF) and now the lender has “no excuse” to delay the staff-level agreement.

The premier however, lamented that the coalition government was making all-out efforts to convince the IMF officials to release a tranche of $1.1 billion, Geo News reported.

Acknowledging the woes of the people because of historic high inflation, the premier accepted that Pakistan had “no choice” but to accept all strict conditions laid forth by the IMF to secure a much-awaited bailout tranche from the Washington-based lender.

Pakistan signed a $6.5 billion bailout package with the IMF in 2019, but has repeatedly reneged on conditions and so far just $3 billion has been released.

On Friday, the United Arab Emirates (UAE) confirmed financial support of $1 billion to Pakistan making it the third country, after Saudi Arabia and long-time ally China, to come to Pakistan’s assistance, as external financing is needed to fully fund the balance of payments gap for the fiscal year that ends in June.

The commitments were one of the IMF’s last requirements before approving a staff-level pact to release a tranche of $1.1 billion, delayed for months, that is crucial for Pakistan to resolve an acute balance of payments crisis.

“Such tough conditions were set which weren’t easy for Pakistan to fulfil,” the premier said, adding that in the last one-and-a-half-month, the coalition government has made a lot of efforts, Geo News reported.

The Prime Minister added that Chief of Army Staff General Asim Munir also contributed to these efforts after which Saudi Arabia and the UAE committed funds.

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Paris Club backs IMF bailout for Lanka, hails India’s role

Paris Club gives assurance to support IMF bailout for SL, hails India's role.

The Paris Club members also urged China, among other official bilateral creditors, to do the same in line with the IMF programme parameters as soon as possible….reports Susitha Fernando

Paris Club creditors, while providing financing assurances to support the International Monetary Fund’s (IMF) approval of an Extended Fund Facility (EFF) for Sri Lanka, appreciated India’s specific and credible financing assurances issued earlier and its coordination with the Club.

The Paris Club is a group of officials from major creditor countries whose role is to find co-ordinated and sustainable solutions to the payment difficulties experienced by debtor countries.

Sri Lanka President’s media division announced on Tuesday that Sri Lanka’s bilateral official creditors, which are Paris Club members including Japan, France, Korea, Germany, the US, Spain, the Netherlands, Russia, Sweden, Austria, Canada, the UK, Denmark, Belgium and Australia, have assured to support the IMF’s approval of $2.9 billion conditional financial assistance, which came as a relief for the cash-strapped island nation.

“To support the implementation of the envisaged IMF supported programme and the Sri Lankan authorities’ efforts with other official bilateral creditors, Paris Club members, jointly with Hungary, expressed their full commitment to negotiate with Sri Lanka’s terms of restructuring their eligible claims, in accordance with the comparability of treatment principle among all bilateral creditors, and with the goal of restoring debt sustainability with due regard to targets and overall macro economicgoals under the EFF,” Paris Club said in a statement, adding, “The members further expressed appreciation for the specific and credible financing assurances issued by India on January 16, and its coordination with the Paris Club.”

The Paris Club members also urged China, among other official bilateral creditors, to do the same in line with the IMF programme parameters as soon as possible.

Sri Lankan,india flag.

Paris Club members had held a meeting on January 25 in the presence of representatives from Hungary, Saudi Arabia, the Kuwait Fund for Arab Economic Development and India, as well as from the International Monetary Fund and the World Bank, to provide financing assurances to support the approval by the IMF executive board of the envisaged IMF programme for Sri Lanka, which would allow to restore the country’s macro economic stability.

The members had examined the macroeconomic and financial situation of Sri Lanka, including its long-term debt sustainability, and the need for a debt treatment by all bilateral creditors to both fill the financing gap and to ensure Sri Lanka’s debt sustainability in line with the proposed Extended Fund Facility.

“We acknowledge that Sri Lankan authorities had the opportunity to present their economic and financial situation to its creditors, which underscored its need for debt treatment from all the creditors. They also presented their reform programme that will be supported by an IMF arrangement requiring debt treatment to restore debt sustainability, as well as the prior actions already implemented,” the Paris Club stated.

“Paris Club members as well as Hungary, Saudi Arabia and India continue to look forward to working together along with all bilateral creditors and to engage with other key stakeholders in order to proceed with a comparable debt restructuring as soon as possible,” the statement added.

“Shortly after the conclusion of a staff-level agreement between the Sri Lankan authorities and IMF staff on September 1, 2022, on a 48-month EFF arrangement, the Paris Club publicly stated its readiness to provide the necessary financing assurances in a timely manner and in coordination with other bilateral official creditors. To this end, the Paris Club has been engaging proactively with Sri Lankan authorities, the IMF, other official bilateral creditors, including by sharing its technical analysis in order to enhance the bilateral official creditors’ collective understanding of the need for debt treatment,” it said.

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‘Pakistan won’t plead to IMF’: Dar on delay in funds

Finance Minister Ishaq Dar stated that the delay was not because of discrepancies within Pakistan’s positioning and standing and went on to criticise IMF’s “abnormal behaviour”, stating that Pakistan will not plead to the global lender nor will take any dictation from it, reports Hamza Ameer

At a time when Pakistan, under the current coalition government of Prime Minister Shehbaz Sharif, is facing a towering challenge of reviving its economic and financial conditions and prevent from moving towards a complete meltdown, Finance Minister Ishaq Dar has expressed his displeasure over the delay in the ninth International Monetary Fund (IMF) review, saying that he will not bow down to what he termed as “dictation” of the IMF.

Talking to a local media outlet, Dar said that he was not concerned whether the IMF team arrives or not to assess and finalise the pending review of the country’s $7 billion Extended Fund Facility (EFF).

The Minister said that the IMF team is more than welcome to visit as the compliance details for the ninth review was “completely in order”.

“I do not care if they come, I don’t have to plead before them. I have to look at Pakistan’s interest first,” he said.

Dar further stated that the delay was not because of discrepancies within Pakistan’s positioning and standing and went on to criticise IMF’s “abnormal behaviour”, stating that Pakistan will not plead to the global lender nor will take any dictation from it.

“I have reassured them that our ninth review is in order and you should come and give Pakistan the $500 million funds,” he said.

The Minister further said that if the IMF review team does not come to Pakistan for the review, Islamabad has already formulated a plan to manage the financial situation by getting support from “friendly countries”.

Prime Minister Shehbaz Sharif

“If they don’t come then we will manage, no problem,” he added.

Part of which has already started to come as Saudi Arabia has agreed to extend term of $3 billion deposit for another year, shoring up the country’s foreign exchange reserves and giving fuel to domestic economy.

However, when Dar was questioned about his rigid positioning on the IMF and its worrisome implications and fallout, he stated that he understands the potential fallout of a breakdown in the talks, which was why he was still talking to the lender.

“I know how to complete the IMF programme. The government will not only complete the current programme, it will also make its payments in time and as per schedule. We will not default,” the Minister emphasized.

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