ISLAMABAD: Federal Minister for Finance Miftah Ismail told a group of journalists in Washington on Sunday the International Monetary Fund (IMF) had agreed in principle to extend its bailout package for Pakistan for another year and increase $2 billion to the total loan size.
The IMF originally agreed to provide $6 billion to Pakistan in July 2019 under its Extended Fund Facility (EFF).
The fund has so far disbursed $3 billion to the country, though the next tranche will only be released after the completion of the seventh review which was stalled after the country’s previous administration deviated from the program objectives by offering a relief package of about $1.7 billion amid rising inflation.
“We have asked the IMF to extend the EFF from three to four years,” Ismail, who is currently in Washington to attend 2022 spring meetings of the IMF and the World Bank Group, told a news conference at the Pakistan embassy.
“So, we are getting this program extended for one year,” he added. “They [the IMF officials] were positive and disposed and this [understanding] will probably be added to the staff agreement.”
The finance minister said he had checked Pakistan’s remaining quota related to the IMF’s special drawing rights (SDR), adding that it amounted to $2 billion.
“So, we have also requested the IMF to increase [the overall loan program] by $2 billion,” he said.
Ismail said the IMF’s continued commitment was very important to Pakistan.
He also mentioned his meetings with World Bank officials, saying Pakistan was hoping to get some technical assistance to strengthen its agricultural sector to increase its output.
In a statement issued on Sunday, the IMF said it had held “productive meetings” with the Pakistani finance minister and other members of his delegation.
“We agreed that prompt action is needed to reverse the unfunded subsidies which have slowed discussions for the 7th review,” said Nathan Porter, the IMF mission chief for Pakistan. “Based on the constructive discussions with the authorities in Washington, the IMF expects to field a mission to Pakistan in May to resume discussions over policies for completing the 7th EFF review.”
Pakistani Finance Minister Miftah Ismail (2nd from R) holds a meeting with IMF officials in Washington on April 24, 2022. (APP)
He added the Pakistani authorities had also requested the IMF to extend the loan arrangement through June 2023 “as a signal of their commitment to address existing challenges and achieve the program objectives.”
In February, former prime minister Imran Khan had announced cuts in fuel and electricity prices despite a steep global rise in the cost of oil, pledging to freeze the new rates for four months with the price differential being covered by the government.
The IMF objected to the decision since it had been asking Pakistan to implement strict economic reforms while carrying out periodic reviews.
The seventh review was stalled soon after the announcement of the relief package and the next tranche was not released under the loan program.
