KARACHI: Expressing confidence to clear the final review of $3 billion short-term financing program of International Monetary Fund (IMF) after meeting key conditions including energy price hike, Pakistani authorities are weighing options to avail another $6-8 billion program, an official privy to the situation confirmed on Tuesday.
The South Asian nation, with a population of over 241 million, increased gas prices by up to 76 percent for domestic consumers in recent months before raising petroleum prices by 1-3 percent in February. The National Electric Power Regulatory Authority (NEPRA) also notified Rs7.05 per unit hike in power prices under fuel charge adjustment (FCA) on Monday.
Pakistani authorities are confident that recent energy price adjustments to meet some of the key conditions of the global lender would help clear the second and last review of the $3 billion Stand By Arrangement (SBA) that ends in March 2024.
“With latest energy price hikes, Pakistan has met almost all the preconditions set by the IMF for end-December 2023 review including exchange rate stability, continuation of tight monetary policy and restricted circular debt flow,” an official of finance division on Tuesday told Arab News on condition of anonymity.
The official said the government was successful in restricting the circular debt flow below the fund’s stated target of Rs385 billion ($1.37 billion), though it went as high as Rs378 billion ($1.35 billion) by the end of last December.
Pakistan’s circular debt stock, outstanding payments and liabilities in the country’s energy sector, continues to swell despite taking painful measures by the government including tariff hikes that resulted in high inflation.
The circular debt within the energy sector escalated to a staggering Rs5.73 trillion (approximately $20.5 billion) by the end of last November, official data reveals. This figure encompassed a power sector debt of Rs2.7 trillion ($9.66 billion) alongside a gas sector indebtedness surpassing Rs3 trillion ($10.7 billion).
While the IMF has not yet announced dates to start negotiations with Pakistan for the second review since it was ostensibly waiting for the formation of the next government, a successful review of the program will enable the South Asian nation to receive another tranche of about $1.1 billion from the fund.
The Pakistani official said the country was exploring various options to put before the IMF to avail new long-term program in recent weeks.
“The options under consideration included the size and conditions for the new program,” he said adding: “Yes, the size could be anywhere between $6-8 billion including the climate financing factor, the RSF.”
The Resilience and Sustainability Facility (RSF) of the IMF offers affordable, long-term financing to countries committed to reforms aimed at mitigating risks to future balance of payments stability, including challenges posed by climate change and pandemic preparedness.
The official, however, clarified that nothing had been finalized yet, adding these options were still at a preliminary stage and would be suggested to the next government, if finalized.
“It will be the prerogative of the next elected government to negotiate the size, terms and condition of the next program with the fund or whether or not they want to go to the IMF,” he added.
Last year in November, Pakistan’s caretaker finance minister Dr. Shamshad Akhtar hinted the country would continue to seek financial facility from the IMF to keep its fragile economy afloat.
Pakistani economists underscored the need for a new IMF program while calling for immediate engagement with the fund.
“It is good to hear that the government is working to get another IMF program,” Dr. Sajid Amin, deputy executive director at Islamabad-based Sustainable Development Policy Institute (SDPI), said.
“The real test, however, will be how quickly the new government takes up the challenge and engages with the fund.”
The present state of economy, particularly the low foreign exchange reserves and high external debt repayments, made it imperative for the country, Amin continued, to seek the IMF support for at least three more years.
“Unnecessary delays, as we witnessed in the PTI [Pakistan Tehreek-e-Insaf] and PDM [Pakistan Democratic Movement] tenures, will hurt the economy,” he warned.
Arab News sought comments from both the IMF and the finance ministry for this story, but received no response.
Pakistan hopes to clear final IMF review, considers additional financing of $6-8 billion
https://arab.news/9xa35
Pakistan hopes to clear final IMF review, considers additional financing of $6-8 billion
- Pakistan has increased energy prices to meet the global lender’s conditions under the short-term $3 billion loan
- Pakistani officials say the final decision to avail another IMF program will be made by the next elected government
At OIC meeting, Pakistan calls on world to halt Israel’s annexation of West Bank
- Israel this month decided to approve land registration procedures in parts of the West Bank for the first time since 1967
- FM Ishaq Dar demands end to Palestinian displacement, reconstruction of Gaza, pathway to independent Palestinian state
ISLAMABAD: Pakistan on Friday called on the international community to stop Israel from annexing the occupied West Bank, demanding a “political pathway” toward an independent Palestinian state.
Israel decided this month to approve land registration procedures in parts of the West Bank for the first time since 1967, drawing sharp criticism from Muslim nations along with several European countries, which described it as a move to ease the path for settlement expansion and annexation.
Speaking at an extraordinary ministerial session of the Organization of Islamic Cooperation (OIC), Pakistani Foreign Minister Ishaq Dar said the development carries profound implications not only for the Palestinian people but also for the credibility of international law, United Nations charter and the integrity of the multilateral system.
“Israel continues with impunity to expand illegal settlements and enforce de facto annexation in the Occupied West Bank. These actions, flagrantly violate international law including UN Charter, UN Security Council Resolution 2803 [endorsing President Donald Trump’s peace plan for Gaza], undermine all diplomatic efforts and threaten the very foundation of a just and lasting peace,” Dar said.
“These violations embolden further aggression, erode regional stability and trample on the rights and dignity of the Palestinian people. The international community must decisively act and act now to halt these violations, uphold international law and ensure delivery of the assurances made in good faith to the group of eight Arab-Islamic countries, including Pakistan.”
The West Bank is among the territories that the Palestinians seek for a future independent state. Much of it is under Israeli military control, with limited Palestinian self-rule in some areas run by the Western-backed Palestinian Authority (PA). More than 500,000 Israelis live in settlements and outposts in the West Bank, excluding Israeli-annexed East Jerusalem, alongside nearly three million Palestinians.
Dar recalled that leaders and the foreign ministers of the group of eight Arab-Islamic countries, including Pakistan, engaged with United States President Donald Trump on the sidelines of the UN General Assembly on Sept. 25 to help end the bloodshed in Gaza, ensure unimpeded humanitarian access, secure a permanent and sustainable ceasefire and advance a comprehensive peace process for the Palestinian brothers and sisters.
“During these consultations, we, the group of eight, ensured that the non-annexation of the Occupied West Bank remained firmly on the agenda and assurances were given to us in New York that the annexation of West Bank would not take place,” he said.
“In view of the serious gravity of the situation, we need to collectively ensure, first, an immediate reversal of all Israeli measures aimed at de-facto annexation of the Occupied Palestinian Territory, including West Bank, which constitutes a red line for any just resolution of the issue of Palestine.”
Pakistan is among the Group of Eight Arab Islamic countries, which also includes Saudi Arabia, Jordan, the United Arab Emirates, Qatar, Indonesia, Egypt and Türkiye. Islamabad does not have diplomatic relations with Israel and maintains a firm policy of non-recognition, rooted in its support for an independent Palestinian state in the Middle East with Al-Quds Al-Sharif as its capital.
Speaking at the meeting, Dar called for an immediate end to all “forms of displacement, democratic manipulation and collective punishment” of the Palestinians, a ceasefire in and reconstruction of Gaza as well as “a credible, irreversible and time-bound political horizon” leading to the establishment of a Palestinian state.
