WASHINGTON: The International Monetary Fund (IMF) and Pakistan resumed their talks on Monday, with Islamabad hoping that these virtual discussions lead to a deal that eases up ever-increasing pressure on the country’s ailing economy.
In Islamabad, 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”.
Pakistan held 10 days of intensive talks with an IMF delegation in Islamabad — from Jan 31 to Feb 9 — but could not reach a deal.
The IMF, however, said in an earlier statement that both sides have agreed to stay engaged and “virtual discussions will continue in the coming days to finalize the implementation details” of the policies discussed in Islamabad.
Insiders say Fund wants Pakistan to start work on agreed measures before releasing next tranche
The talks in Islamabad focused on the ninth review of an IMF Extended Fund Facility (EFF) arrangement with Pakistan, concluded in 2019.
The IMF appreciated Prime Minister Shehbaz Sharif’s commitment to implement policies needed to safeguard macroeconomic stability and described the discussions as constructive.
The IMF also acknowledged they made “considerable progress … on policy measures to address domestic and external imbalances”. The Fund highlighted the key priorities discussed in Islamabad, which included increasing revenue, reducing untargeted subsidies, and scaling up social protection programmes.
Diplomatic observers in Washington say the IMF wants Pakistan to start implementing the suggested measures. The sources point out that the IMF statement issued after the Islamabad talks underlined this issue as well.
“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,” the IMF said.
The ‘official partners’ identified in this statement include international financial institutions like the IMF as well as Pakistan’s bilateral partners such as China and Saudi Arabia that the sources said were reluctant to extend financial support to Pakistan without an IMF package.
“The IMF is adamant, no deal without implementation,” said a diplomatic source.
When asked if Pakistan was close to clinching a deal with the lender, a senior Pakistani government figure told Dawn: “Not that I am aware of. This time, they want to make sure that we do not renege on our pledges.”
Former FBR chairman Shabbar Zaidi tweeted, “We do not have any choice other than IMF. All stakeholders have to be on board.” He also suggested removing the “impression that politics and political considerations are overriding economics”, because “at stake is Pakistan.”
“What a tragedy! A country of 224 million people with nuclear capability waiting for consent from junior IMF officers after uselessly delaying the programme for 3 months,” he wrote.
Published in Dawn, February 14th, 2023
