ISLAMABAD: Pakistan is making last-ditch efforts with the International Monetary Fund (IMF) to revive the stalled Extended Fund Facility (EFF) programme, JEE News reported on Monday.
Hopes are dwindling every day mainly because the ongoing $6.5 billion program under the EFF will expire on June 30.
Negotiations are ongoing between Pakistan and the IMF to complete the ninth review, which was scheduled to take place on November 3 last year. Formal negotiations began on January 31 when an IMF delegation visited Pakistan for in-person talks.
However, the two sides could not reach a consensus during the scheduled talks that ended on February 9. Since then, several online sessions have been held but differences persist over the terms set by the fund for the Staff Level Agreement (SLA).
If the SLA is not killed before the upcoming budget for 2023-24, to be presented on June 9, the ongoing program will fail.
“A couple of options are left to move forward. The first is to immediately sign the SLA and refer Pakistan’s request to the IMF’s Executive Board for approval of the next tranche of $1 billion and meet the 10th and 11th. To get an extension of a few months in the duration of the EFF program. Review, “sources, familiar with the background discussions, told JEE News.
Another option could be to combine the 9th and 10th reviews and share future budget data with the IMF for Pakistan.
Then after the budget announcement, the SLA is signed and subject to parliamentary approval, the IMF’s Executive Board can approve joint tranches and an extension of the EFF program to cover the 11th review by July or August 2023. can give
“There is no easy option available. Both sides will have to work out ways to build consensus. But with the current approach of maintaining the status quo, no progress can be achieved,” the official said on condition of anonymity. Said on the condition of not doing.
‘Options are limited’
Dr. Khaqan Najib, a former advisor to the Ministry of Finance, said that increasing political uncertainty, less desirable economic management and inability to secure external sector financing could be some of the reasons why the country has not reached a staff-level agreement. has failed to do so. The IMF
The delay originally started on November 3 and then after February 10, has brought new areas such as the budget and Pakistan’s financing options beyond June 2023 to the IMF’s attention. These are not easily answered questions for a government managing an economy in a crisis-like situation.
“Pakistan’s options are limited and without the IMF program, default risk will remain high and reserves will remain weak.”
Options to strike the SLA in the next few days or to combine the 9th and 10th assessments and then call for the program to be extended beyond June are looking unlikely, said Dr Najib and He added that life without the IMF meant additional financing. From friendly countries, rollovers and trade financing at higher rates.
But those who know better know that this is all temporary as any interim or new setup will have to be backed by another program with the IMF as $25 billion is needed for repayment.
He concluded that this would be in addition to the money for current account financing for FY24 and that would seem almost impossible without the IMF.
