Talks will virtually resume. (Representative)
Karachi, Pakistan:
Pakistan and the International Monetary Fund are due to resume online talks next week, they said on Friday in Islamabad after ten days of face-to-face discussions on how to keep the country afloat ended without a deal.
With the nuclear-armed nation in a full-blown economic crisis, IMF talks aim to unlock at least $1.1 billion in stalled funds as part of a $6.5 billion bailout signed in 2019.
Finance Minister Ishaq Dar told reporters that Pakistan has agreed with the IMF on the terms of the release of the funds, which have been delayed since last December.
He cited “routine procedures” for the delay, saying talks would resume on Monday. “Whatever is agreed upon between our teams, we will implement it,” Dar said.
In a statement, Nathan Porter, the head of the IMF mission to Pakistan, confirmed that the talks are ongoing and that there has been considerable progress. However, the hold-up caused the price of the country’s government bonds to drop again.
Pakistan desperately needs a successful outcome. The $350 billion economy is still reeling from last year’s devastating floods, and the government estimates that reconstruction efforts will cost $16 billion.
The heavily indebted nation only has enough foreign reserves to cover less than three weeks’ worth of vital imports. Analysts say the longer it takes to pay the IMF tranche, the higher the risk of default, especially with elections round the corner.
Last week, Prime Minister Shahbaz Sharif called Pakistan’s economic situation “unimaginable”.
“Ideally, Pakistan should have reached a staff-level agreement at the end of the IMF mission,” Khaqan Najeeb, a former adviser to the finance ministry, told Reuters.
“The delay is inexcusable.”
imf measures
A so-called staff-level agreement, which then needs to be approved by the IMF’s head office in Washington, must be reached before the funds are disbursed.
Apart from the stalled tranche, there is $1.4 billion left in the $6.5 billion bailout programme, which is set to end in June.
Experts said that Pakistan needs payment at the earliest. “If this goes on for more than a month, things become more difficult because our foreign exchange reserves have reached a critical level,” Murtaza Sayed, a former deputy governor of the central bank, told Reuters.
Conditions set by the IMF include a return to market-based exchange rates and higher fuel prices, measures Pakistan recently implemented and which have already sent inflation to a record high – 27.5% year-on-year in January. – and created a shortage in some imported goods.
Dar said that Pakistan has also agreed with the IMF to introduce fiscal measures including new taxes.
Analysts fear that more fiscal tightening could put the economy in further jeopardy.
Saqib Sherani, who served as Principal Economic Adviser to the Ministry of Finance in 2009-10, said, “Not only has the government wasted five months in not understanding the seriousness of the situation, it is still leading the country into an economic abyss.” Is.”
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
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