ISLAMABAD , June 21, 2023: Can Pakistan still salvage the International Monetary Fund (IMF) loan programme? Well! There is still some hope as the government reportedly requested a meeting between Prime Minister Shehbaz Sharif and IMF Managing Director Kristalina Georgieva on the sidelines of New Global Financing Pact summit in Paris this week.
The request comes, according to sources, as it emerged a day earlier that the ongoing talks between the two sides had failed, meaning that the country would no more get any money from the world’s top lender as the current programme expires on the 30th of this month.
Although the finance ministry tried to convince the IMF by explaining Pakistan’s position on different reservations and conditions, the process led by Finance Minister Ishaq failed to produce the desired results.
However, there can still be a breakthrough as if the meeting is held and the IMF is ready to soften its stance and harsh conditions.
It is a steady addition of new conditions and the latest reservations expressed on the next year’s budget that have delayed the approval since Nov 2022 despite regular contacts between two sides.
The country has been awaiting the IMF’s final approval of the pending 9th review under the Extended Fund Facility (EFF) programme which will expire on June 30 without the disbursal of the remaining $2.6 billion out of a total of $6.5bn. Hence, there hasn’t been any possibility of making any progress on the 10th review.
Among other things, Pakistan has been accused of controlling the rupee exchange rate artificially and not reversing subsidies – the two issues about which Finance Minister Ishaq Dar is very much clear.
Dar has been of the opinion that the depreciation of rupee is the main reason behind Pakistan’s economic woes and this stance is nothing new as he has always been a staunch advocate of strong currency.
President Macron is hosting a summit in Paris this week to discuss reform of the world’s multilateral finance institutions in the face of climate change and other development challenges.
The summit on Thursday and Friday aims at pining down a roadmap for easing the debt burdens of low-income countries while freeing up more funds for climate financing.
The summit brings dozens of leaders together in the French capital to forge a top-level consensus on how to progress a number of initiatives currently struggling in bodies like the G20, IMF, World Bank and United Nations.
Ranging from debt relief and rising interest rates to climate finance, many of the topics on the agenda take up suggestions from a group of developing countries, led by Barbados Prime Minister Mia Mottley, dubbed the ‘Bridgetown Initiative’.
Governments are also looking at ways to allow the WB to use leverage to lend more to poor countries without putting its top AAA credit rating a risk.