Pakistan asks IMF to relax $6bn external financing condition
Last updated on: 25 June,2023 12:06 pm
The international financial institution still wants to withdraw subsidies given to textile sector
ISLAMABAD (Dunya News) – The International Monetary Fund (IMF) expressed its willingness to consider a proposal forwarded by Pakistan to relax its condition concerning $6 billion external financing for the next fiscal year’s budget, sources told Dunya News on Sunday.
The external financing has been a major bone of contention as the world’s top lender has not approved the 9th review, pending since November last year, with the current IMF programme set to expire within days on June 30.
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It has been insisting on this condition with a view that Islamabad won’t be able meet the country’s financial obligations unless the friendly nations came forward with assistance.
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But, according to the sources, the finance ministry during the latest round of ongoing talks between the two sides, which got impetus after Prime Minister Shehbaz Sharif held three meetings with IMF Managing Director Kristalina Georgieva during his stay in France, has asked the top lender to ease the condition.
In its response, the IMF gave green light to the proposal as the government, in return to the easing the external financing condition, opted for increasing the taxes by Rs215 billion as announced by Finance Minister Ishaq Dar in the National Assembly on Saturday.
However, there are some other hurdles too as the IMF is sticking with its demand to withdraw the concessions/ subsidies given to the textile sector including the subsidised power tariff.
The finance ministry, the sources say, has informed the IMF that they would respond within two days and, the sources say, a major breakthrough is expected if all the government fulfils all the conditions.
Pakistan had hoped to have $1.1bn of the funds released in November - but the IMF has insisted on meeting all the conditions before it makes any more disbursements before the end of the $6.5 billion Extended Fund Facility (EFF).
In the given scenario, it impossible that 10th and 11th reviews would ever be held, meaning that the current IMF would not be completed even if the financial institution approves the 9th, resulting in releasing the $1.1bn tranche. Hence, Pakistan won’t be eligible for the remaining $1.4bn.