ISLAMABAD: Amid continuous delays to the staff-level agreement with International Monetary Fund (IMF), the government on Tuesday said arrangements had been made to meet external obligations of $3.7 billion by end-June.

In a statement, the Ministry of Finance said $3.7bn had to be repaid during the remaining period of the current fiscal year ending June 30. “This should not be any cause of concern as arrangements have been made for the rollover/repayment of this debt”, it said, adding that significant inflows were also in the pipeline during this period. The PMLN-led coalition government had averted the default and the economy was now on a course to stability and growth, it added.

This coincided with Chinese charge d’affaires in Islamabad Ms Pang Chunxue who called on Finance Minister Ishaq Dar to convey ‘best wishes and greetings’ on behalf of Qin Gang the State Councillor and Foreign Minister of China who visited Islamabad recently. “She guaranteed the continuous support of the Chinese government to the people of Pakistan”, the finance ministry said in a separate statement.

Pakistan and the IMF had been facing a deadlock for almost three months now in reaching a staff-level agreement after the two sides concluded negotiations for the completion of the 9th review of the IMF programme on Feb 9.

Pakistani authorities have since been saying they have met all the pre-conditions and blame the Fund over unfair treatment and changing goalposts while the IMF staff had been attributing delays to confirmation of funding commitments from bilateral lenders.

As a consequence, three final quarterly reviews involving about $2.5bn worth of IMF flows have become uncertain before the programme finally reaches its terminal date of June 30. That would require the beginning of talks for a fresh fund programme at a more crucial stage when Pakistan would be in the election phase and yet require over $6bn in fresh repayments to external creditors in the first half (July-December 2023) of the next fiscal year.

The non-availability of IMF umbrella has also delayed inflows from other multilateral creditors, foreign commercial banks and capital markets even though Saudi Arabia and UAE have reconfirmed their commitments to the IMF for disbursements before the close of the fiscal year. The authorities expect a formal signing of a contract with Saudi Arabia within a couple of days.

Of the remaining $2bn needs, the authorities expect inflows on account of flood-related commitments and a programme loan co-financed by the World Bank and the Asian Development Bank over the next couple of weeks. The Chinese $2bn in SAFE deposits are also expected to be rolled over early next month. Pakistan’s foreign exchange reserves held by the central bank in the meanwhile stand at a precarious $4.5bn position.

Mr Dar while talking about the deep-rooted historical bilateral relations commended the Chinese support to Pakistan on multiple fronts and underscored the need to further strengthen economic cooperation in all sectors.

The two sides discussed various avenues, especially available for both countries to enhance the trade volume to unprecedented levels. They also talked about the progress on CPEC projects and programmes in Pakistan, the statement said.

Pang Chunxue appreciated the huge potential of Pakistan in terms of agriculture, industry, IT and services sector as well and assured the finance minister that China would work to bring economic prosperity to the region.

Mr Dar said Pakistan was confident that with the support of China, it would not only become a growing economy of the region but the world as well soon.

Published in Dawn, May 10th, 2023

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