ISLAMABAD: Pakistani finance minister Miftah Ismail said on Monday talks to resume an International Monetary Fund (IMF) bailout program, suspended earlier this year, were “on track,” refuting media reports that the scheme had been postponed.
Pakistan last week said it had received economic and financial targets from the IMF that once agreed and ratified should pave the way for the lender to unlock a suspended $6 billion loan program.
Pakistan desperately needs the money to avert a balance of payment crisis that is being brought closer by the day as result of the sharp rise in global oil and commodity prices. Central bank foreign currency reserves have fallen dangerously low, and the economy is reeling from a sharp depreciation in the Pakistani rupee and double-digit inflation.
Pakistan entered the IMF program in 2019 spread over three years and three months, but with less than half the amount disbursed, the IMF suspended the bailout earlier this year after the previous prime minister, Imran Khan, announced unfunded subsidies for the oil and power sectors. Khan’s government was ousted in April.
A Pakistani news website reported on Monday the IMF program had been “further postponed and the point of dispute is the improvement of anti-corruption regulations.”
“I have been reading with some amusement all the tweets and stories about IMF program being postponed or delayed due to some anti-corruption law,” Ismail said on Twitter. “There is no truth to it. The IMF program is on track.”
Needing to get back in the IMF’s good graces, the new government, led by Prime Minister Shehbaz Sharif, has removed fuel subsidies, and made adjustments in a budget presented on June 10 that aimed at reducing the government’s fiscal deficit, which was one of the IMF’s key requirements.
Delivering an update following talks between Pakistani and IMF officials, Ismail said in a tweet last week that government had received the IMF’s Memorandum of Economic and Financial Policies (MEFP) containing economic and fiscal targets under the seventh and eighth reviews of the program.
Having the two reviews completed at the same time raises the prospect of $1.9 billion being disbursed once the IMF board gives the all clear to resume the bailout program.