Pakistan, IMF resume virtual talks over bailout package
Business
Islamabad held 10 days of intensive talks with an IMF delegation but couldn't reach deal
ISLAMABAD (Web Desk) - Pakistan and the International Monetary Fund (IMF) have resumed their talks over release of ninth tranche of the Extended Fund Facility (EFF).
The federal government hopes that these virtual discussions will lead to a deal that eases up ever-increasing pressure on the country’s ailing economy.
Finance Secretary Hamed Yaqoob Sheikh told Reuters the “duration (of the talks) cannot be confirmed but we intend to wrap these up at the soonest”. Islamabad held 10 days of intensive talks with an IMF delegation - from Jan 31 to Feb 9 - but could not reach a deal.
The IMF, however, said in an earlier statement that both sides had agreed to stay engaged and “virtual discussions will continue in the coming days to finalise the implementation details” of the policies discussed in Islamabad.
Accoriding to Reuters, talks between the International Monetary Fund and Pakistan were to be resumed virtually as the two sides look to reach a deal to unlock funding critical to keep the cash-strapped south Asian country afloat.
A Pakistani official told the internarional wire service on Monday that the two sides could not reach a deal last week and a visiting IMF delegation departed Islamabad after 10 days of talks, but said negotiations would continue. Pakistan is in dire need of funds as it battles a wrenching economic crisis.
“Duration (of the talks) cannot be confirmed but we intend to wrap these up at the soonest,” Finance Secretary Hamed Yaqoob Sheikh told Reuters in a text message, confirming that talks were resuming on Monday.
Talks centre around reaching an agreement on a reforms agenda under the country’s $6.5 bailout programme, which it entered in 2019.
An agreement on the ninth review of the programme would release over $1.1 billion.
On Friday, IMF had issued a short four-paragraph statement at the conclusion of its mission’s 10-day visit to Islamabad, stressing that “timely and decisive implementation of policies along with resolute financial support from official partners are critical for Pakistan to successfully regain macroeconomic stability”.
It had added that virtual discussions will continue to finalise the implementation details of policies, implying that an agreement to revive the programme through a staff-level agreement may still take some time as Pakistan moves to execute the prior actions.
“The IMF team welcomes the Prime Minister’s commitment to implement policies needed to safeguard macroeconomic stability and thanks the authorities for the constructive discussions,” the mission chief’s, Nathan Porter, was quoted as saying in the statement.
“Considerable progress was made during the mission on policy measures to address domestic and external imbalances.
“Key priorities include strengthening the fiscal position with permanent revenue measures and reduction in untargeted subsidies, while scaling up social protection to help the most vulnerable and those affected by the floods; allowing the exchange rate to be market determined to gradually eliminate the foreign exchange shortage; and enhancing energy provision by preventing further accumulation of circular debt and ensuring the viability of the energy sector.
“The timely and decisive implementation of these policies along with resolute financial support from official partners are critical for Pakistan to successfully regain macroeconomic stability and advance its sustainable development.”
Pakistan’s foreign exchange reserves held by the central bank have fallen to $2.9 billion, barely enough to cover three weeks of imports.
A resumption of the IMF programme would also unlock other avenues of funding for Pakistan.
An agreement, if reached, would still need to be cleared by the IMF board.
-- Additional input from REUTERS
