KARACHI: International Monetary Fund mission chief for Pakistan, Ernesto Ramirez-Rigo, held two-day introductory meetings with Pakistani authorities, the IMF said on Wednesday, to discuss the terms of an emergency financial assistance to ease a mounting balance of payments crisis.
IMF mission chief Ramirez-Rigo arrived in Islamabad on Tuesday on his first visit to Pakistan as both sides move closer to a deal that is expected to fetch Pakistan $6 billion.
“Discussions focused on recent economic developments and prospects for Pakistan in the context of ongoing discussions toward an IMF-supported program,” the IMF statement said, adding that Ramirez-Rigo had concluded his trip after visits to Islamabad and Karachi.
In Pakistan, Ramirez-Rigo met with Minister of Finance, Asad Umar, Minister of Commerce, Razzak Dawood, Minister of Power, Omer Ayub, State Minister for Revenues Hammad Azhar, and several government senior officials, including the Finance Secretary, Younus Dagha, the Chairman of Federal Board of Revenues, Jehanzeb Khan, and Advisor to the Prime Minister on Institutional Reforms and Austerity, Ishrat Hussain, Governor of the State Bank of Pakistan Tariq Bajwa and other senior officials.
Finance ministry spokesman Dr. Khaqan Hassan Najeeb said the talks with the IMF chief centered around industries, commerce, fiscal framework and the external sector.
An IMF staff team last visited Islamabad from September 27-October 4, 2018 and reported that Pakistan was facing an “increasingly difficult economic situation, with high fiscal and current account deficits, and low international reserves.”
“This mostly reflects the legacy of an overvalued exchange rate, loose fiscal policy and accommodative monetary policy,” the team said.
On Tuesday, the finance ministry denied that discussions had focused on the target exchange rate.
“No target exchange rate was discussed, neither does IMF envisage a target,” the finance ministry spokesman said. “Focus is on further strengthening the exchange rate regime, aligning it and keeping it consistent with the evolving macroeconomic fundamentals of the economy.”
Talks with the IMF began soon after Prime Minister Imran Khan’s government was appointed last August but a package has been held up by differences over the pace and scale of reforms that Pakistan would be required to undertake.
The IMF has pressed Pakistan to improve tax revenue collection, bolster foreign currency reserves and narrow a current account deficit expected to top 5 percent of gross domestic product this year.
Pakistani officials say they agree on the need for reforms but do not want to sign up to conditions that would derail the economy, with growth set to slow this year to around 4 percent from 5.2 percent last year.
Pakistan and the IMF are expected to finalize the bailout package during spring meetings.