Wednesday, November 29, 2023

External financing requirements for IMF deal with Pakistan not changed, clarifies IMF

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The International Monetary Fund (IMF) Resident Representative in Pakistan denied local media reports that the Fund was looking for new financing and stated that Pakistan’s external financing needs had not changed during discussions over bailout funds.

The clarification follows a report that was published on Saturday by the Express Tribune, which cited sources and claimed that the IMF had increased its demand for additional financing from an earlier unmet condition of USD 6 billion to USD 8 billion in order to ensure upcoming debt repayments for the period of May to December 2023.

According to a review that would release USD 1.1 billion in financing for the cash-strapped South Asian country as part of a USD 6.5 billion IMF package, Perez Ruiz stated on Sunday that the external funding requirements had not changed throughout the discussions.

Since the last staff-level mission to Pakistan in November, there has been a delay in reaching an agreement on the review that is the longest since at least 2008. According to Dawn, the IMF reiterated on Thursday that it would be crucial to secure agreements on external financing from friendly nations before it would permit the release of bailout funds.

In March and April, Pakistan received pledges from the United Arab Emirates, Saudi Arabia, and China that would help make up some of the funding shortfall. According to information released on Thursday, Pakistan’s central bank reserves decreased by USD 74 million to USD 4.38 billion, barely enough for one month’s worth of imports.

In a seminar on Thursday, Pakistan’s Finance Minister Ishaq Dar asserted that the nation would not default, with or without the IMF, and that it could not afford to impose any further harsh measures to appease the IMF.

According to Dawn, Pakistan has changed its mind about implementing a fuel cross-subsidy that had alarmed the IMF.

Perez Ruiz, a resident representative for the IMF, stated that during last month’s spring meetings, Pakistani authorities pledged to the IMF that they would not implement the cross-subsidy scheme in the fiscal year 2023 or later. She described the plan as “typically regressive and abuse-prone.”

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