ISLAMABAD: After an entire day of suspense, talks between a cash-strapped Pakistan and the International Monetary Fund (IMF) concluded on Thursday without the two sides reaching a staff-level agreement, secretary finance Hamed Yaqoob Sheikh confirmed.
The two sides have been negotiating since the beginning of the month for the revival of a stalled $6.5 billion loan program. The IMF mission, which was scheduled to leave Pakistan on February 10, was involved in day-long talks with government officials to find a breakthrough that would see Pakistan receive the next tranche of $1.1 billion from the lender.
Pakistan faces a crippling dollar liquidity crunch amid the rapid depletion of its official foreign currency reserves which currently stand at $2.916 billion. The situation has forced the government to restrict even the import of essential items, including medical equipment and industrial raw material, which has had a negative impact on Pakistan's overall economy.
The resumption of the IMF loan is expected to ease the situation while making other bilateral and multilateral sources of funding available to the country.
“The staff-level agreement between Pakistan and the IMF has not been reached yet,” the secretary-finance told a select group of journalists after negotiations with the global lender concluded.
"The IMF has shared the MEFP (a key document indicating a movement toward a likely agreement) with the government," he said. He added that both sides have agreed on certain prior actions before the staff-level agreement.
Implementing the prior actions means the government would hike electricity and gas prices to abolish the energy sector debt. This would generate additional revenue through new taxes to overcome the primary deficit.
"Some points between the IMF and Pakistan are yet to be settled, which will be decided from Washington [the IMF headquarters],” he said, adding that the staff-level agreement would be signed after approval from the IMF's headquarters.
"The IMF review mission has sought additional time to reach a staff-level agreement," he said. Sheikh added that the IMF mission said “it was beyond their mandate” to accept some suggestions of the government without the approval of the headquarters.
He said the IMF mission would issue a detailed statement on the negotiations, following which Finance Minister Ishaq Dar will brief the media.
The IMF staff mission was in Pakistan from January 31 to February 9 following a request from Islamabad for negotiations to revive the bailout program.
The finance secretary claimed the government and the IMF have reached an agreement over the required external financing of Pakistan for the remaining fiscal year. These additional required inflows will be coming from multilateral creditors, friendly countries, and commercial loans, he said.
Sheikh did not specify the amount.