IMF facility revival hopes recede as reviews still unfinished

ISLAMABAD: Pakistan’s options for reviving the IMF programme are limited with the passage of every day. It is yet to be ascertained how the country will proceed to accomplish the existing IMF programme on its expiry deadline of June 30, 2023.

The IMF’s eleventh review under the $6.5 billion Extended Fund Facility (EFF) programme for Pakistan will become due tomorrow (Wednesday) at a time when Islamabad is still unable to accomplish the pending 9th review. Both sides had so far been unable to strike a staff-level agreement to complete the 9th review. Under the IMF programme, the tenth review had become due on February 3, 2023, but it could not be done.

Top official sources told The News on Monday that both the IMF and Pakistani sides were holding each other responsible for the unwarranted delay in the completion of the outstanding 9th review and reviving the stalled programme after the lapse of almost 80 days after both sides accomplished Islamabad parleys on February 9, 2023. Now the sources in the IMF say that they were still waiting for confirmation on external financing requirements despite Islamabad providing guarantees on $3 billion in additional deposits from the Kingdom of Saudi Arabia (KSA) and the United Arab Emirates (UAE) respectively. The IMF now wants confirmation on the remaining $2 billion from World Bank (WB), and Asian Infrastructure Investment Bank (AIIB) $900 million and seeking commercial loans from banks. Without additional $2-$3 billion confirmation, the IMF is reluctant to strike a staff-level agreement. On the other hand, Pakistani authorities argued that the Fund was playing politics with the Pakistani side as the agreement should have been signed much earlier. “It’s nothing but the political game is on” they added.

When contacted Dr Khaqan Najeeb former Advisor Ministry of Finance told The News the inordinate delay raises questions about the difficulties in completing the 10th and 11th reviews (worth over $ 1 billion) scheduled for February 3 and May 3 2023 respectively.

He said whether it’s delays in price adjustments, a credible circular debt management plan, filling the financing gap, petrol cross-subsidy, or payment of election expenses something or the other keeps propping up to hold back the staff-level agreement. Of course, exogenous events and geopolitics have their share of compounding the picture for Pakistan. He said it is most tragic to be happening at a time of the most serious domestic economic crisis and a challenging global scenario. IMF is the lender of last resort, probably it can move forward in that spirit. For Pakistan to remain near the brink of default is not a good option. In the short run, funding from friendly countries and revival of the IMF programme, clarity on the programme completion dates, and work on budget 2024 is the least that needs to be done, he concluded.