Finance Minister Miftah Ismail said on Friday that IMF Managing Director Kristalina Georgieva has agreed with Pakistan’s request to ease the conditions under the Extended Fund Facility (EEF) programme.
However, Ismail said a “lot of negotiations” were yet to be held with the international lender, adding that the IMF official had also agreed to increase the amount Pakistan would receive in the next tranche. He said, however, that the IMF official had requested that the IMF get more information about Pakistan before any final decision was made.
Finance Minister Ishaq Dar also told a news channel that he had informed the IMF of Pakistan’s changed economic situation after the floods, the destruction of cotton crops and the difficulties the country would face in ensuring adequate wheat supplies.
He said that the IMF officials understood our position and were almost ready to agree to it, but formal negotiations would take place in two weeks when he traveled to Washington. The situation and the size of the tranche would also be taken into account in future tranches, he said.
Ismail said he also had meetings with World Bank officials, receiving $2 billion this year.
He feared that if all the cotton crops in Sindh were washed away in the floods, then we would have to import cotton crops. On the other hand, if we could not sow wheat at the right time, the wheat [output] would be reduced. Should we allow our people to die? We would also have to import that, he stated.
Ismail said he had met billionaire philanthropist Bill Gates to “discuss milk and other things”, while Prime Minister Shehbaz Sharif spoke to Saudi Crown Prince Mohammad bin Salman about food for children.
There is a shortage of dollars, and the IMF has stipulated conditions for intervening in the rupee market, Ismail said when asked about the currency’s sharp drop against the dollar.
“Dollar is strengthening against all currencies. Pakistan’s perception of default has increased [but] we will absolutely not default. This is why the dollar has risen but it will come under control in the coming days,” he said.
The IMF’s Executive Board completed the combined seventh and eighth reviews of a loan facility for Pakistan last month, allowing for immediate disbursement of $1.1 billion.
The board also approved Pakistani authorities’ request for waivers of nonobservance of performance criteria.
The statement issued by the IMF headquarters in Washington at the time specified that the organisation’s priorities were to keep implementing the recently approved budget for FY23, maintain a market-determined exchange rate, and maintain an aggressive and prudent monetary policy.
It is also critical to expand social security to protect the most vulnerable and speed up structural reforms, including improving the performance of state-owned companies and governance, the statement said.
The July 2019 EFF arrangement — signed by Pakistan — provided $6bn over 39 months. Last month, the IMF board extended the program until June 2023.
