In a recent disclosure, Ishaq Dar, the Finance Minister of Pakistan, stated that the coalition government has consented to share specifics of its forthcoming budget with the International Monetary Fund (IMF). This move aims to catalyze the release of funds currently in limbo.
“Upon their request for additional details, such as the budget specifics, we have agreed to provide the information,” Dar commented during a conversation on the Geo News program Jirga on Sunday.
Dar emphasized that Pakistan has met all prerequisites stipulated by the Washington-based financial institution to rejuvenate the halted $6.5 billion initiative. He further implored the international lender to disburse the funds ahead of the upcoming federal budget scheduled for next month.
The finance minister suggested that certain entities oppose Pakistan’s economic stability, blaming the previous Pakistan Tehreek-e-Insaf (PTI) government for wreaking havoc on the nation’s economy.
“During Imran Khan’s term, inflation skyrocketed,” he noted, adding that the former prime minister fell short of adhering to the agreement with the IMF.
Pakistan’s receipt of $1.1 billion from the IMF, a segment of the $6.5 billion bailout package agreed upon in 2019, has been in a stalemate since November.
Despite two weeks of dialogue in Islamabad between the IMF and Pakistan in February to finalize the 9th review, the lender has yet to disburse the critical funds necessary for Pakistan to unlock other bilateral and multilateral financial sources.
Dar voiced his desire for the IMF to release these funds before the budget presentation due in early June, adding, “We won’t lump the 9th and 10th reviews together. That would be unjust.”
With the Extended Fund Facility (EFF) program expiring on June 30, Pakistan is exerting eleventh-hour efforts to resuscitate the stagnant $6.5 billion program.
Negotiations between Pakistan and the IMF for completing the ninth review, initially due on November 3 last year, continue. Formal discussions commenced on January 31 with the arrival of an IMF delegation in Pakistan for face-to-face talks.
Nevertheless, consensus eluded both parties during the slated discussions, which wrapped up on February 9. Despite multiple virtual meetings since then, differences persist regarding the Fund’s conditions for the Staff Level Agreement (SLA).
Failure to establish the SLA before unveiling the 2023-24 budget, set for June 9, could spell failure for the ongoing program.
“Looking ahead, we’re left with a couple of choices. One entails promptly signing the SLA and submitting Pakistan’s request to the IMF Executive Board for approval of the subsequent $1 billion tranche and securing an extension of the EFF program by a few months to carry out the 10th and 11th Reviews,” shared insiders privy to the background discussions.
Alternatively, the 9th and 10th reviews could be combined, with Pakistan disclosing forthcoming budget figures to the IMF. Following the budget announcement and its parliamentary approval, the IMF’s Executive Board could give the green light to combined tranches and extend the EFF program to complete the 11th Review by July or August 2023.
“Neither of the choices presents an easy way out; both parties must work out the mechanics for a consensus. Maintaining the status quo, however, won’t lead to any breakthroughs,” stated an anonymous official.
