Pakistan said on Tuesday it had received economic and financial targets from the International Monetary Fund (IMF) which, once agreed and ratified, should pave the way for the multilateral lender to unblock a suspended bailout package.
Pakistan is in desperate need of money to avert a balance of payment crisis which is approaching day by day due to the sharp rise in global oil and commodity prices.
Central bank foreign exchange reserves have fallen to $8.2 billion, barely enough to cover six weeks of imports, and the economy is reeling from a sharp depreciation of the Pakistani rupee and a double-digit inflation.
Read more: Pakistan finally reaches an agreement with the IMF
Pakistan entered a $6 billion IMF program in 2019 spread over three years and three months, but with less than half the amount disbursed, the IMF suspended the bailout earlier this year after the former Prime Minister Imran Khan announced unfunded subsidies for oil and electricity. sectors. Khan’s government was overthrown in April.
Needing to get back into the IMF’s good graces, the new government, led by Shehbaz Sharif, cut subsidies and made adjustments in a budget presented on June 10 that aimed to reduce the government’s fiscal effort. deficitwhich was one of the main requirements of the IMF.
Early this morning, the government of Pakistan received a MEFP from the IMF for the combined 7th and 8th reviews.
— Miftah Ismail (@MiftahIsmail) June 28, 2022
Providing an update following discussions between Pakistani and IMF officials, Finance Minister Miftah Ismail said in a tweet that the government had received the IMF’s Memorandum of Economic and Financial Policies (MEFP) containing economic objectives and budget under the seventh and eighth program reviews.
Significantly, having the two reviews completed at the same time raises the prospect of disbursement by $1.9 billion once the IMF board gives the green light to resume the bailout program.
“I got a message from the finance minister early in the morning that we could get $2 billion from the IMF instead of $1 billion,” Prime Minister Sharif told an economic seminar in Islamabad on Tuesday.
Read more: Shaukat Tarin reveals the agreement between the IMF and the government
Once the IMF releases the next tranche, it should open other channels of external financing to Pakistan to bolster its reserves.
Reuters with additional input from GVS News Desk