IMF looking forward to working with new govt to ensure macroeconomic stability: official

Published February 23, 2024
Julie Kozack, the head of the Communications Department at the IMF, speaks during a press briefing. — Screenshot via IMF website
Julie Kozack, the head of the Communications Department at the IMF, speaks during a press briefing. — Screenshot via IMF website

The International Monetary Fund (IMF) has stated that it is looking forward to engaging with the new government on policies to ensure “macroeconomic stability and prosperity for all of Pakistan’s citizens”.

The development comes a day after PTI Senator Ali Zafar told reporters that a letter would be sent from incarcerated party founder Imran Khan to the international lender urging it to call for an independent audit of the Feb 8 general elections before it continues talks with Islamabad.

Zafar said the IMF, the European Union and other organisations had a charter that stated that good governance was needed for working in the country or giving a loan.

“The most important condition for good governance is democracy,” he said, adding that the people’s mandate was stolen “in the darkness of the night” during the Feb 8 polls.

He said that if elections were not free and fair, any organisation would avoid giving a “loan” to such a country. “Because that loan will further burden the people,” he said. He said the PTI wanted an audit of the election results and that condition would be put in front of the IMF.

It should be mentioned that Pakistan averted default last summer thanks to a short-term IMF bailout, but the programme expires in April and a new government will have to negotiate a long-term arrangement to keep the economy stable.

During a press briefing held early on Friday, Julie Kozack, the head of the Communications Department at the IMF, was asked about whether Pakistan was on track to secure the third tranche of the stand-by agreement reached in June 2023.

She was also asked whether the IMF would entertain any letter by Imran calling for investigations into election irregularities.

In her response, Kozack said: “On January 11, the IMF Executive Board approved the first review of the Stand-By Arrangement, with Pakistan that brought total disbursements under the Stand-By Arrangement to $1.9 billion. The Stand-By Arrangement is supporting the authority’s efforts to stabilise the economy and to, of course, with a strong focus on protecting the most vulnerable.”

She said that during the tenure of the interim government, the authorities had “maintained economic stability”.

“This has been done through strict adherence to fiscal targets while also protecting the social safety net. It has been done by maintaining a tight monetary policy stance to control inflation and to continue to build up foreign exchange reserves,” she said.

“We look forward to working with the new government on policies to ensure macroeconomic stability and prosperity for all of Pakistan’s citizens. And I am going to leave it at that,” she said.

Asked to specifically comment on a possible letter by Imran, she said, “I’m not going to comment on ongoing political developments. So, I don’t have anything else to add to what I just said.”

Pakistan had secured a last-gasp $3bn Stand-by Arrangement last year in June with an immediate disbursement of $1.2bn to helping the country narrowly avoid default.

On January 11, the IMF’s executive board completed its first review of the country’s economic reform programme, allowing for the release of $700 million. This brought total disbursements under the programme to $1.9 bn.

The current IMF programme is expected to conclude in the second week of April.

Pakistan ‘to seek $6bn in new IMF programme’

Pakis­tan plans to seek a new loan of at least $6 billion from the International Monetary Fund (IMF) to help the incoming government repay billions in debt due this year, Bloomberg News reported on Thursday, citing a Pakistani official.

The country will seek to negotiate an Extended Fund Facility with the IMF, the report said, adding that the talks with the global lender were expe­cted to start in March or April.

The IMF and the caretaker finance minister did not immediately respond to a Reuters’ request for com­ment on the Bloomberg report.

The country’s vulnerable external position me­ans that securing fina­ncing from multilateral and bilateral partners will be one of the most urgent issues facing the next government, ratings agency Fitch said on Monday.

“A new deal is key to the country’s credit profile, and we assume one will be achieved within a few months, but an extended negotiation or failure to secure it would increase external liquidity stress and raise the probability of default,” it said.


Additional input from Reuters

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