Pakistan crisis: Talks with IMF to begin tomorrow; here’s what to expect
- Pakistan and the International Monetary Fund (IMF) are currently locked in a debate over an unfinished loan program required for the ongoing economic crisis.
Pakistan and the International Monetary Fund (IMF) are currently locked in a debate over an unfinished loan program required for the ongoing economic crisis. The Pakistan government is likely to resume virtual talks with the International Monetary Fund (IMF) tomorrow i.e. on 6 March, a report by Pakistan-based media outlet Dawn has stated. These talks with the IMF will finalise revenue and expenditure figures for the next four months, a senior government official told the daily.
Some sources also told the daily that both the sides will discuss and review a draft Memorandum of Economic and Fiscal Policies (MEFP), generally called the staff-level agreement (SLA) in detail from Monday onwards.
The Pak government has been trying hard to fulfill all its demands to unlock the $1.1 billion bailout package, however, the officials revealed that the administration is quite nervous as it finds it difficult to convince the global lender for the funds.
The report by Dawn further stated that the Federal Board of Revenue (FBR) has also been tasked with collecting an additional Rs170 billion in revenue to fill the gap.
Earlier, a senior official had also told Dawn that, “We are members of the IMF, not beggars, or else our membership be discarded.
Earlier on 4 March, Finance Minister Ishaq Dar said that the country is set to receive a $1.3 billion financing boost from the Industrial and Commercial Bank of China Ltd (ICBC) in the coming days. While speaking at a press conference in Islamabad on March 3, Dar confirmed that all formalities had been completed and that documentation for the process was now complete. The fund will be used to help shore up Pakistan’s foreign exchange reserves as the country faces challenging economic conditions. Dar also confirmed that it was possible that $500 million could be received by Monday or Tuesday of next week, with a further $500 million to be provided within the following 10 days. Dar reported that the State Bank of Pakistan (SBP) had $3.82 billion in foreign exchange reserves, which, when added to the sums held by commercial banks, totaled almost $9.26 billion.
“There will be a further increase in this. I think China has given proof of great friendship," Dawn quoted Dar as saying.
Also Read: 'Eating one meal’, ‘can't send kids to school’: How common man in Pakistan fighting raging inflation
On this, an official also told the daily after receiving the full $1.3 billion from the ICBC and another $1.1 billion tranche from the IMF could bring the country in a better position.
Apart from this, Pakistan Prime Minister Shehbaz Sharif will also be travelling to Qatar on a two-day visit beginning today to participate in the 5th United Nations Conference on the Least Developed Countries. The conference will be held from March 5-9. Shehbaz has been invited by Emir of Qatar Sheikh Tamim bin Hamad al-Thani. At the conference, the leaders will mobilise additional international support measures and action in favour of the Least Developed Countries (LDCs) and agree on a renewed partnership between LDCs and their development partners.
Apart from this, in Doha, the prime minister will hold bilateral meetings and interactions with participating leaders and heads of delegation on the sidelines of the conference.
Meanwhile, there are four items included in the unfinished IMF loan program agenda which is early hike in the central bank’s interest rate, exchange rate movement to cater for outflow to sanction-hit Afghanistan, written assurances for external financing gap from friendly nations, and the continuation of ₹3.39 per unit financing cost surcharge on electricity consumers for coming years through the finance bill, according to Dawn.
As a result of these four conditions, Pakistan's central bank has increased the interest rate by 300 basis points (bps) to 20 percent which is the highest level since October 1996. The decision was taken by SBP in its monetary policy committee meeting on March 2.
The government had also surrendered to the last IMF demand and imposed a surcharge of ₹3.23 per unit on electricity consumers across the country. The surcharge will come into effect from July 1, according to a media report on Thursday.
A Human Rights Watch also stated that Pakistan is struggling with one of its worst economic crisis in history, jeopardizing millions' rights to health, food, and an adequate standard of living. Some reports have also claimed that to tackle the situation, people are ‘eating less’ and ‘travelling less’ to survive on a day-to-day basis.
The Rights group suggested that the Pakistani government and IMF should address the crisis in a way that protects low-income people, as per Dawn reports. Fuel prices in country has skyrocketed, including a Rs22.20 jump in petrol and a Rs17.20 hike in diesel rates. And this has hit hard Ali, who now finds it difficult to travel to his village to meet his family.
As per some economists, the recent floods that destroyed a significant portion of agricultural land and caused a shortage of food supply, along with tax increases announced by the Finance Minister, are considered major reasons for the current inflationary trend in the country.
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First Published:5 Mar 2023, 11:40 AM IST
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