Thursday, May 11, 2023
Pakistan needs significant additional financing for a successful completion of the long-stalled ninth review of the International Monetary Fund's bailout package, the IMF said on Thursday.
Obtaining commitments of "significant additional financing" is essential before the IMF approves the release of pending bailout funds that are crucial for Pakistan to resolve an acute balance of payments crisis.
A staff-level accord to release a $1.1 billion tranche out of a $6.5 billion IMF package has been delayed since November, with nearly 100 days gone since the last staff-level mission to Pakistan. That is the longest such gap since at least 2008.
Julie Kozack, an IMF spokeswoman, said in a scheduled press conference that financing already committed by Pakistan's external partners was welcomed.
The United Arab Emirates, Saudi Arabia and China came to Pakistan's assistance in March and April with pledges that would cover some of the funding deficit.
On Thursday, Pakistan's central bank reserves fell $74 mln to $4.38 billion, barely a month's worth of imports.
"Our team is very heavily engaged of course with the Pakistani authorities, because Pakistan indeed faces a very challenging situation," said Kozack.
She added that the economy was facing stagflation, has very large financing needs and has also been affected by a series of shocks including severe floods.
Pakistan has committed not to implement a cross-subsidy programme, an IMF spokesperson told Bloomberg News. The government also will not introduce new tax exemptions and will “durably allow” a market-based exchange rate for the rupee currency, the IMF told Bloomberg on Thursday.
In March, Prime Minister Shehbaz Sharif proposed charging affluent consumers more for fuel, with the money raised used to subsidise prices for the poor who have been hit hard by inflation. The proposed scheme was seen as one of the reasons for the delay in implementing the IMF bailout.