ISLAMABAD: The International Monetary Fund (IMF) is stretching muscles to discuss Pakistan’s plans for the coming fiscal year budget as part of long-awaited financing support from the monetary body for the cash-strapped nation, the country mission chief of the IMF said on Thursday.
Negotiations over the key targets of the budget, such as the fiscal deficit, are one of the key and last hurdles till the lending body approves a staff-level agreement to release 1.1 billion dollars in funding, which has been delayed since November, which is important for Pakistan to resolve the crises of the balance of payments.
He said that in all IMF programs, the concerned authorities issue a letter of intent associated with the recent review outlining their policy intentions for the period after the program.
According to Reuters, Finance Minister Ishaq Dar reiterated on Thursday that Pakistan has already fulfilled all the prior basic actions for the 9th review.
Meanwhile, government officials expressed that external financing was the last hurdle for implementing the deal. The country is required to give an assurance that the deficit of its balance of payments is fully financed for the current fiscal year ending in June this year to unlock the next tranche of IMF funding.
Saudi Arabia, UAE (United Arab Emirates), and China came to Pakistan’s support with funding in March and April.
A successful staff-level agreement (SLA) for the 9th review of the IMF, which has been delayed since November, will release the $1.1 billion tranche.
IMF Funding to Pakistan
The pending amount is part of a $6.5 billion bailout package the International Monetary Fund approved in 2019, which would be ended in June this year prior to the budget. Till date, Pakistan has received $3.9 billion during the said programme up until its 8th review.
Pakistan is reeling from an economic quagmire with inflation surging to 36.4%, and even more, the highest in Pakistan’s history and the highest in South Asia, including Sri Lanka.
The government of Pakistan has removed caps on the exchange rate, raised energy tariffs, imposed taxes, and withdrew subsidies in an attempt to release the IMF funding. Pakistan has also raised key interest rates to a record 21%.
