WASHINGTON: Federal Minister for Planning and Development Ahsan Iqbal said on Wednesday that the International Monetary Fund (IMF) has not added new conditions to the staff-level agreement it concluded with Pakistan last week.
Bloomberg reported earlier on Wednesday that the Fund was “assessing Saudi Arabia’s commitment to financing Pakistan before it disburses fresh funds to the South Asian nation.”
The minister, who has held two meetings with IMF officials in New York and Washington this week, said the fund “did not raise this issue in talks with us.”
Asked at a news briefing at the Pakistan Embassy in Islamabad, Mr Iqbal said, “The Fund did not suggest any new conditions in our meetings.”
Bloomberg report claims Fund ‘assessing Saudi commitment to Pakistan’ before fresh disbursement
The minister said that the IMF has agreed to “release the funds by August and extend the facility to June 2023 and add one billion dollars to the package.”
However, Bloomberg reported that the Washington-based lender “wants to ensure that Saudi Arabia will follow through with as much as $4bn in funding to Pakistan to ensure Islamabad does not have a funding gap after the IMF loan.”
The IMF and Pakistan reached a staff-level agreement last week to complete the combined seventh and eighth reviews of the country’s Extended Fund Facility (EFF). The IMF’s Executive Board still has to approve the agreement before Pakistan receives the next tranche of $1.2bn, bringing total disbursements under the programme to about $4.2bn. The board is expected to meet in August.
The Bloomberg report also said that the $1.2bn from the IMF would be insufficient for Pakistan to avoid a debt default. The report pointed out that “Pakistan’s rupee and bonds are sinking as the financing woes, coupled with renewed political uncertainty, roil the country.”
Pakistan needs at least $41bn in the next 12 months to fund debt repayments and boost foreign exchange reserves, the report added.
The planning minister said that in his meeting with IMF officials at the UN he suggested setting up a Covid-like facility for developing countries to help them deal with the impact of the Ukraine war.
“This war is a super-shock for developing economies,” he said. “It has upset their balance of payments, created a food shortage and a major energy crisis for them. This impact is stronger than that of the pandemic.”
Mr Iqbal said that the international community, particularly developed countries, “must devise a mechanism to provide fiscal relief for developing countries so that they can revive their development funds and social support budgets.”
The minister said that in his meeting with IMF officials in Washington he reiterated Pakistan’s commitment to the IMF programme, which was violated by the PTI government. “This violation has shaken the confidence of lenders like the IMF,” he said. “We assured them that there would be no more breaches of confidence. We told them that Pakistan means business,” the minister said.
“We urged them to tell their board, when it meets to consider the staff level agreement, that we want to do all we need to revivify our economy.”
Published in Dawn, July 21st, 2022