WASHINGTON: The International Monetary Fund (IMF) said on Thursday it was holding open and constructive discussions with Pakistan on the 6th review of its financial package and stood ready to support the country in achieving its objectives of debt sustainability.
In July 2019, the IMF approved a 39-month arrangement under the Extended Fund Facility (EFF) for Pakistan for an amount of $6 billion to support Islamabad’s economic reform programme.
Asked at a news briefing to comment on the status of the programme’s sixth review, IMF spokesperson Gerry Rice said: “We welcome the open, constructive discussions we are having with the Pakistani authorities. We stand ready to continue to support Pakistan achieving its objectives of debt sustainability and a strong sustainable growth.”
The completion of the review would “require continued discussions on the sustainable fiscal path, structural reforms, particularly on the tax and energy sectors and social spending enhancements envisaged in the authorities’ reform programme that’s supported by the IMF resources,” the official said.
Spokesman says more discussions needed on tax and energy sectors
“As the recovery gains strength, it will be important to accelerate the implementation of policies and reforms needed to address some of the longstanding challenges facing the Pakistani economy,” he added.
The IMF spokesperson acknowledged that a “recent mission (for talks on the sixth review) could not complete these discussions” but “we remain fully engaged with the authorities, aiming to resume the discussions in the period ahead”.
Mr Rice, however, did not say if the IMF had halted or continued the disbursement during the interim period.
Pakistan this month set a target of 4.8 per cent growth in gross domestic product for the 2021-22 financial year and a fiscal deficit target of 6.3pc. The country surpassed growth projections in the 2020-21 financial year despite a third wave of Covid-19 infections, reaching GDP growth of 3.96pc, after a 0.47pc contraction in 2019-20.
Earlier media reports had suggested that the IMF had postponed the sixth review of its programme for Pakistan and the new assessment would take place in September.
On Tuesday, Foreign Minister Shah Mahmood Qureshi also indicated that the review talks were not going on smoothly when he said at a television talk-show that the government could not put the future of the nation at stake to appease lenders.
In March, the IMF released a tranche of $500 million for Pakistan after approving four pending reviews of the country’s economic progress. The approval revived the $6bn programme after it remained latent for over a year. The IMF programme also brings endorsements for the country for other lenders, which adds to the programme’s significance for Pakistan.
The approval followed some tough decisions in Islamabad to stabilise the economy. The measures included a steep rise in electricity bills, imposition of Rs140bn taxes and agreeing to grant unprecedented autonomy for the central bank.
The foreign minister, however, blamed previous governments for forcing the government to enter a programme that led to tough decisions. He also acknowledged that some of the recent measures taken by the government had burdened the masses but promised to shift the focus to economic development.
Earlier this month, Finance Minister Shaukat Tarin ruled out any disagreement between Pakistan and the IMF, adding that the Fund’s EFF would continue as both wanted it to move forward.
Published in Dawn, June 25th, 2021