IMF wants other countries to finalize ‘pledges’ before Pakistan bailout
Representative Perez says Fund sees ‘substantial progress’ by Islamabad but agreement will follow once ‘few remaining points are closed’: Govt did not consult IMF on fuel subsidy proposal
March 21, 2023 11:33 PM
The International Monetary Fund said Pakistan has made “substantial progress” toward meeting policy commitments needed to unlock billions of dollars in loans the country needs to avoid a default but “few remaining points are yet to be finalized”, reported Bloomberg.com.
Pakistan has taken tough measures including increasing taxes and energy prices, and allowing its currency to weaken to restart a $6.5 billion IMF loan package. The funds will offer some relief to a country still reeling from last year’s devastating floods and help pull the economy out of a crisis ahead of elections this year.
“A staff-level agreement will follow once the few remaining points are closed,” said Esther Perez Ruiz, the IMF’s resident representative for Pakistan, adding “Ensuring there is sufficient financing to support the authorities in the implementation of their policy agenda is the paramount priority.”
Finance Minister Ishaq Dar said last week that the IMF wanted to see countries finalize commitments they’ve made to help Pakistan shore up its funds before signing off on the bailout package. Pakistan needs to repay about $3 billion of debt by June, while $4 billion is expected to be rolled over.
In a statement, Ruiz said the lender wasn’t consulted on the government’s plan to raise fuel prices for wealthier motorists to finance a subsidy for lower-income people.
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“Fund staff are seeking greater details on the scheme in terms of its operation, cost, targeting, protections against fraud and abuse, and offsetting measures, and will carefully discuss these elements with the authorities,” she said.
EFF is a financial arrangement between the IMF and a member country, providing economic support and policy guidance over an extended period. The ninth EFF review for Pakistan is of particular significance as it will determine the release of the next tranche of funding.
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