ISLAMABAD: Prime Minister Shehbaz Sharif confirmed his administration’s resolve on Saturday to implement the economic reforms specified in a bailout package given by the International Monetary Fund (IMF) to his country amid a balance of payment crisis in 2019.
The international financial institution wanted Pakistan to remove fuel and power subsidies while carrying out structural economic adjustments to deal with its perennial financial challenges. The IMF’s remedy entailed significant political cost since it led to spiraling inflation in the country at a time of diminishing foreign exchange reserves and major currency depreciation.
“In a phone call with Managing Director of the IMF yesterday, I told her about the government’s resolve to complete the terms of IMF’s program,” the prime minister said in a Twitter post.
He added that he also “explained Pakistan’s economic difficulties especially after the devastating floods” to the top IMF official.
The prime minister’s statement comes hours after he said on Friday that an IMF team was going to arrive in Pakistan in the “next two, three days” to carry out the 9th economic performance review under the $7 billion loan program.
“I received a call from the IMF managing director last evening,” he informed while addressing a ceremony in Islamabad. “I told her there is no likelihood of a default, but you should send your delegation so that the 9th review of the IMF is completed and we get the IMF tranche.”
“She said ‘you are right and the team will come in the next two, three days’,” he continued.
The country’s central bank announced on Friday Pakistan’s foreign exchange reserves had hit an eight-year low after they plummeted to $5.6 billion during the last week of December.
Under the current financial circumstances, financial experts have warned the government has no option but to meet the IMF terms and conditions to secure some external financing.
Pakistan’s finance minister announced recently the country was hoping to get additional deposit from Saudi Arabia and a rollover of $1.2 billion from China.
The Pakistani prime minister said on Friday the Chinese premier had told IMF Managing Director Kristalina Georgieva on her recent visit to Beijing the Chinese authorities were with Pakistan and the IMF should also support the South Asian country.
Pakistan entered a $6 billion loan program in 2019, which was later expanded to $7 billion.
The 9th review, which has been pending since September, will allow the release of around $1 billion to cash-strapped Pakistan.