ISLAMABAD: International Monetary Fund (IMF) Resident Chief in Pakistan Esther Perez Ruiz has said that the lender is reviewing recent developments in Pakistan, hoping to find a peaceful solution to the current crisis.
The remarks came in response to a question whether there is any possibility of finalizing the staff-level agreement within the current month, given the recent political developments, or whether the next budget negotiations will begin without the conclusion of the ninth review. .
Esther added: “We note recent developments, and while we do not comment on domestic politics, we hope to find a peaceful way forward.”
On economic matters, the IMF resident chief said staying within the policy framework agreed upon in the review and sufficient financing from partners to support the authorities’ efforts to implement macroeconomic stability is the key to retrieving
Esther added that February’s mini-budget, energy price adjustments, and measures aimed at easing import restrictions and market-fixed exchange rates will stabilize the economy while supporting the most vulnerable. There are important steps for
“The IMF welcomes the announcement of significant financial assistance to Pakistan from key external partners and looks forward to receiving assurances of ‘remaining essential financing’,” he added.
The resident also denied reports that the IMF was asking Pakistan to mobilize $8 billion in fresh financing.
“The IMF will continue to support Pakistan in the best possible way to secure substantial financing from partners.
He concluded, “To assist the authorities in their implementation efforts and to ensure that Pakistan continues to maintain external payments, no changes were made during the discussions during the ninth review.” “
As the IMF is reluctant to strike a staff-level agreement without confirming the external financing gap, in the meantime, Pakistan has informed the Fund’s staff to complete the ninth review otherwise the 2023-24 budget framework. Work will not be shared.
Long-standing differences between the IMF and Pakistan are leading to an “unbreakable impasse” with Pakistani officials claiming that the $4 billion financing was confirmed with the IMF with full details and breakdowns. was also shared but this fund was playing “politics”. Despite the lapse of six months, there is no progress towards the implementation of the agreement.
The ninth review was supposed to take place in November 2022, but the two sides have yet to reach an agreement.
Pakistan’s top officials are running out of patience as they argue to IMF officials that Islamabad should be treated as a member of the fund, not a beggar.
Pakistani officials argued that during talks between January 31 and February 9, the current account deficit for the current fiscal year was estimated at $8 billion, hence the financing gap for the current fiscal year ending June 30. 7 billion dollars were worked on.
However, the Pakistani authorities maintained that the current account deficit would be brought to the range of $4-5 billion, so the financing gap should also be narrowed.
After two months of negotiations, the IMF narrowed the financing gap to $6 billion, keeping in mind the declining level of the deficit. Now the current account deficit has turned into a surplus of $640 million for March 2023 and overall it stood at a deficit of $3.4 billion for the first nine months of the current fiscal year.
Pakistani officials are optimistic that the current account deficit will remain in surplus till April 2023 when the data is released in the next few days.
The $4 billion financing gap was filled by the confirmation as the Kingdom of Saudi Arabia told the IMF it was ready to provide another $2 billion in deposits and the UAE $1 billion.
The World Bank is committed to providing $450 million to RISE-II and $250 million through the AIIB after four preconditions are met. Pakistan also received firm commitments to receive $350 million of the total Geneva pledges for flood-affected areas.
Only one billion dollars is left from commercial banks and they are waiting for an agreement from the IMF.
Pakistani officials maintain that external financing requirements have been met, so there was no justification for using delaying tactics to avoid signing the agreement.
Keeping this situation in mind, the Finance Ministry is all set to share the Budget Strategy Paper (BSP) with the Federal Cabinet in its meeting today (Monday) without sharing it with the IMF.
