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IMF agrees to send mission to Pakistan after compliance of prior conditions

ISLAMABAD (Eshfak Mughal):- The International Monetary Fund (IMF) mission will visit Pakistan on January 31 to resume discussions on the stalled 9th review of the $7 billion Extended Fund Facility (EFF).

According to the IMF Resident Representative in Pakistan Esther Pérez Ruiz, at the request of the Pakistani authorities, an in-person Fund mission is scheduled to visit Islamabad from January 31st to 9th February to continue the discussions under the ninth EFF review.

It is pertinent to mention here that 9th review meeting was scheduled on last week of Oct 2022 as per original time frame.

“The mission will focus on policies to restore domestic and external sustainability, including to strengthen the fiscal position with durable and high quality measures while supporting the vulnerable and those affected by the floods; restore the viability of the power sector and reverse the continued accumulation of circular debt; and reestablish the proper functioning of the FX market, allowing the exchange rate to clear the FX shortage,” the statement added.

It further said that stronger policy efforts and reforms are critical to reduce the current elevated uncertainty that weighs on the outlook, strengthen Pakistan’s resilience, and obtain financing support from official partners and the markets that is vital for Pakistan’s sustainable development.

Earlier, IMF has turned down Pakistan’s request for sending its team for the completion of the 9th review and has asked the Finance Ministry to first take all prior actions.

Following IMF’s clear message, during virtual talks held during the week, Pakistani officials assured the IMF that it will complete all prior actions. The officials also shared a draft of a mini-budget worth Rs. 200-300 billion with the IMF.

The Pakistani Rupee plunged to a record low of Rs. 255.43 against the US Dollar in the interbank market today, losing Rs. 24.54. A clear indication that the government has finally agreed to IMF’s condition of implementing a market-based exchange rate.

Pakistan has been reluctant to accept prior actions demanded by the IMF, which saw talks on the ninth review being delayed for months. Former finance minister Miftah Ismail has categorically blamed Finance Minister Ishaq Dar for his anti-International Monetary Fund (IMF) approach, saying that the country has suffered a huge financial loss due to this.

Pakistan’s falling reserves, which currently stand at just $3.7 billion, coupled with the reluctance of friendly countries to provide financial assistance without resumption of the IMF program finally forced it to accept the prior actions demanded by the global lender.

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