ISLAMABAD: After prolonged negotiations, Pakistan and the International Monetary Fund (IMF) are reportedly on the verge of finalizing a deal for the 9th review of the country’s Extended Fund Facility (EFF). According to sources cited by a private news channel, an official announcement regarding the signing of the agreement is expected soon.
The breakthrough follows a series of meetings between the two sides, including a crucial discussion between Prime Minister Shehbaz Sharif and IMF Managing Director Kristalina Georgieva in Paris earlier this week. The meeting took place ahead of the June 30 expiration of the EFF agreed upon in 2019.
Under the $6.5 billion EFF’s 9th review, which concluded earlier this year, Pakistan has been seeking to secure $1.1 billion of funding that has been stalled since November. The sources indicate that obstacles in the ongoing review have now been resolved after intensive discussions held over the past three days.
Finance Minister Ishaq Dar and his team engaged in multiple rounds of talks with the IMF to address concerns related to the budget for the fiscal year 2023-2024. The sources suggest that the review will be concluded expeditiously, stating that “the two sides have finalized the new draft.”
Pakistan’s Balance of Payment Crisis
Pakistan is facing a pressing balance of payment crisis, with foreign exchange reserves at the central bank barely sufficient to cover one month of controlled imports. The release of IMF funding is crucial for unlocking other bilateral and multilateral financial assistance.
Expressing frustration over the delay, Islamabad asserts that it has implemented all the necessary fiscal measures requested by the IMF. However, the IMF still has reservations regarding Pakistan’s external financing gap, foreign exchange market operations, and the budget presented earlier this month, which it believes deviates from the program’s objectives.
While Pakistan has defended the budget, it has also offered to review it further in discussions with the IMF. The resolution of the ongoing review will not only provide much-needed financial support but also pave the way for other sources of international financing, alleviating Pakistan’s balance of payment challenges.
