ISLAMABAD: An International Monetary Fund (IMF) team is expected to conclude its second and last review of a $3 billion standby arrangement with Pakistan today, Monday, as Islamabad grapples to avoid a macroeconomic crisis and stabilize its fragile $350 billion economy.
An IMF team arrived in Pakistan last week to carry out a four-day review under a $3 billion, short-term loan program secured by Islamabad last summer. Pakistan has said it has met all the structural benchmarks and targets set by the lender, hoping that a successful completion of the performance evaluation will be followed by the release of a remaining tranche of around $1.1 billion.
Pakistan has also expressed its interest in getting a new loan under the Extended Fund Facility (EFF) program, as it continues to carry out structural reforms to strengthen its debt-ridden economy. Pakistan’s state media reported last week that its talks with the lender were “progressing positively.”
“Pakistan will move forward on the path of development and witness growth,” Information Minister Attaullah Tarar was quoted as saying by the state-run Radio Pakistan broadcaster. “Decisions of this government will yield positive results.”
Pakistan secured the $3 billion IMF program in last June after it narrowly escaped a sovereign default. The South Asian country’s economy, burdened by debt, has been under extreme stress due to low reserves, a balance of payment crisis and inflation at 23 percent. Pakistan has also kept its policy interest rates at 22 percent and suffered record local currency depreciation over the past two years.
Pakistan’s newly appointed finance minister said last week Islamabad plans to tap Middle Eastern commercial banks for financing after securing a new and long-term bailout plan from the IMF.
Pakistan has been financially assisted by countries like Saudi Arabia and the United Arab Emirates in the past, with deposits of billions of dollars in its central bank, followed by rollovers.
Gulf states have also regularly provided Pakistan oil on deferred payment facilities and offered direct financial support to help stabilize its economy and shore up its foreign exchange reserves.
The new finance minister, Muhammad Aurangzeb, has also called for introducing transparency in tax collection, comprehensive documentation of the economy, and its full-scale digitization.