IMF rejects Pakistan’s claim of meeting loan conditions

The International Monetary Fund (IMF) has reportedly rejected the Pakistan government's claim that it has met all the conditions to reach an agreement with the global financial body to release funds under an already agreed loan facility.

In 2019, the IMF signed a deal to provide $6 billion to Pakistan on fulfillment of certain conditions. The plan was derailed several times and the full reimbursement is still pending due to insistence by the donor that Pakistan should complete all formalities.

However, Prime Minister Shehbaz Sharif and Finance Minister Ishaq Dar have claimed that Pakistan met all the prior conditions agreed for reaching a staff-level agreement and there was no reason for holding back the agreement.

The Express Tribune newspaper in its report mentioned that the IMF has negated the claim made by the Pakistani government with respect to meeting all prior actions necessary to complete the 9th review.

“The IMF continues to work with the Pakistani authorities to bring the 9th review to a conclusion once the necessary financing is in place and the agreement is finalised,” the newspaper quoted Nathan Porter, the IMF Mission Chief to Pakistan, as saying.

Porter’s statement negated what the Pakistani authorities have been claiming since February 9, when the face-to-face talks ended inconclusively.

Pakistan's finance minister said that they needed $6 billion to bridge the financing gap by June this year. The cash-strapped country's gross official foreign exchange reserves remain at $4.5 billion. The country needs to pay nearly $4 billion to the world on account of principal and interest on debt till June this year.

Since the government does not have a credible financing plan for the July-December period of the next fiscal year, Pakistan also needs to arrange funds to repay the loans during the first half of the next fiscal year.

The external debt repayments, including interest, for the July-December period amount to $11 billion, the report mentioned.

Even if China and Saudi Arabia roll over their short-term debts, Pakistan will still need over $4 billion to repay the international creditors during the first half of the next fiscal year. These include payments to the World Bank, the Asian Development Bank, Saudi Fund for Development, Islamic Development Bank, and Chinese commercial banks.

The finance ministry told the daily that the finance secretary recently urged Porter to review the demand for an agreement on the next year’s budget. However, the IMF, already agitated by the government’s contradictory claims about the completion of the conditions, may not offer any major relief to Pakistan.