IMF says will continue talks with Pakistan on loan program once new government formed

KARACHI: The International Monetary Fund (IMF) said on Monday talks for a seventh review of a $6 billion loan program would continue with Pakistan once a new government was formed after the South Asian country’s prime minister announced fresh elections last week. 
Pakistan and the IMF were negotiating for the completion of the seventh review under the IMF’s Extended Fund Facility program, which has so far disbursed $3 billion out of a stipulated $6 billion. The discussion had stalled over the fund’s concerns about a $1.7 billion relief package, which included the freezing of petroleum prices and a cut in electricity tariffs in response to rising inflation. 
“The Fund looks forward to continue its support to Pakistan and, once a new government is formed, we will engage on policies to promote macroeconomic stability, and enquire about intentions vis-a-vis program engagement,” Esther Perez Ruiz, the IMF’s resident representative for Pakistan, said in a statement on Monday. “There is no concept of suspension within IMF programs.”
On Sunday the deputy speaker of the National Assembly of Pakistan, who belongs to PM Khan’s party, blocked a vote on a no-confidence motion from taking place, and the president subsequently dissolved the lower house of parliament on the PM’s advice, triggering political and constitutional crisis in the country.
Pakistan’s ministry of finance officials are hopeful IMF talks will continue when a new finance minister takes charge. 
“We have shared our documents with fund officials and once the new finance minister will take the charge the talks with the fund will start,” Muzzamil Aslam, the spokesman for the finance ministry, told Arab News. 
Pakistan expects to receive around $1 billion after the completion of the seventh review of the loan program.
Pakistan has faced significant pressure on its foreign-exchange reserves in recent months, amid elevated global commodity prices and a recovery in domestic demand. The Russia-Ukraine military conflict, which has driven up global commodity prices, has amplified pressure on its external position. The country is a net oil importer, with petroleum and related products accounting for about 20 percent of total imports. 
Pakistan’s current account deficit amounted to more than $12 billion between July 2021 and February 2022, a stark contrast to a $1 billion surplus in the same period a year earlier. The South Asian country is expected to witness a widening current account deficit to 5-6 percent of GDP.