9th review of Extended Fund Facility between IMF, Pakistan underway in capital Islamabad

By Shafiq Ahmad

ISLAMABAD (AA) - With Pakistan's national reserves falling to $3.7 billion, the country's talks with the International Monetary Fund resumed on Thursday in the capital Islamabad, with the former pressing the international lender for an urgent release of $1.2 billion and the latter adding strings to the disbursement.

The IMF team, led by Mission Chief to Pakistan Nathan Porter, is already in the capital and has begun formal negotiations with the country's finance team, led by Federal Minister for Finance and Revenue Senator Ishaq Dar, on the 9th review of the Extended Fund Facility on Tuesday, said an official statement.

The two sides will continue technical discussions on expenditure cuts and revenue measures following technical deliberations in the first round, which is scheduled to last until Friday, before moving on to crucial policy-level negotiations over the next weekend until Feb. 9, according to local media.

The latest negotiations comes as the country's foreign exchange reserves have fallen to a nine-year low of $3.7 billion, which is insufficient to cover even three weeks of imports, according to Dawn newspaper, which also reported that the government is in talks with the IMF about a bailout that would also unlock inflows from friendly countries.

In 2019, the IMF and Pakistan agreed to a $6 billion bailout, which was later topped up by an additional $1 billion. Pakistan has received $4 billion so far, with the remaining sum not yet paid due to Islamabad's apparent failure to meet the IMF's terms and conditions.

“He (Dar) briefed the mission on fiscal and economic reforms and measures being taken by the government in different sectors including bridging the fiscal gap, exchange rate stability, and in the energy sector for the betterment of the economy,” said a statement from the Ministry of Finance on Tuesday.

“There is no other option but to implement the agreed conditions and implement structural reforms in the power sector,” an official who requested anonymity told The Business Recorder newspaper.

The government must raise electricity and gas prices and levy taxes because the gap between revenue and expenditure has been increasing, said the official, who was privy to the meeting.

Pakistan has been grappling with a number of challenges since the removal of former Premier Imran Khan, whose Pakistan Tehreek-e-Insaf (PTI) party was in power in the federal government until April of last year and in the two provinces until a few weeks ago.

Khan was removed from office through a no-confidence motion in the National Assembly, prompting his PTI lawmakers in the lower house to tender resignations, which were accepted in stages by the speaker from the Pakistan Democratic Alliance (PDM), an alliance of over a dozen political parties, mostly in January when the former premier announced his return to the house.

The leaders of the PDM and the PTI are criticizing each other for laying "economic mines" during their previous governments in order to politically damage opponents in public.

However, the general public is becoming a victim of these "economic landmines," especially at a time when the world is still coping with the repercussions of Russia's war on Ukraine and the coronavirus pandemic that caused the global economy to squeeze.