Pakistan set to resume talks with IMF next week to revive $ 6 billion loan program


Pakistan and the IMF signed the $ 6 billion deal in July 2019, but the program derailed in January 2020 and was briefly reinstated in March this year before derailing again in June.

Cash-strapped Pakistan is expected to resume talks with the International Monetary Fund (IMF) next week to revive a $ 6 billion loan program, according to an Oct. 3 news report.

The five-day round of technical talks will begin virtually on October 4, with the arrival of the IMF team from Doha, Qatar, L’Express Tribune reported.

The outcome of the talks would facilitate the immediate disbursement of one billion dollars by the IMF.

Pakistan and the IMF signed the $ 6 billion deal in July 2019, but the program derailed in January 2020 and was briefly reinstated in March this year before derailing again in June.

From June to August, there was no serious discussion between the two parties.

Sources said Finance Minister Shaukat Tarin was keen to end the talks on a positive note in face-to-face meetings with senior IMF management in Washington on October 15, the newspaper reported.

The IMF has yet to signal its willingness to hold face-to-face meetings and has instead offered virtual meetings October 13-15. Therefore, the schedule for talks at the political level remains tentative and will be finalized next week, according to the finance ministry. sources.

Discussions at the political level coincide with the annual IMF-WB meetings which will take place from October 11 to 17.

The Pakistani Embassy in Washington and the Governor of the State Bank of Pakistan (SBP) are trying to secure dates from IMF senior management for a physical meeting.

The Finance Department did not respond to whether the October 13-15 tour in Washington would also be held virtually.

The ministry also did not respond to another question regarding Pakistan’s request to meet with the managing director of the IMF.

Finance Minister Tarin has already announced that he will travel to Washington from October 12 to 17 to meet with senior IMF management on the sidelines of the annual meetings.

The sources said that during the recent interaction, the finance ministry showed some leniency in accepting the IMF’s demands, as the four-month deadlock in the talks proved costly for the government. , which relies heavily on foreign loans to stay afloat. During the talks, the two sides would try to find common ground on the controversial issue of an increase in electricity prices.

In recent interactions, the IMF has indicated that Pakistan should increase electricity tariffs because staff cannot change their position taken in front of the IMF’s management and board.

Another crucial question that will be decided in the next two weeks is whether Pakistan wishes to withdraw from the IMF program according to its original schedule of September 2022 or whether it needs an extension to secure the remaining loan of 4 billions of dollars.

According to the report, the government wants the IMF to advance the disbursement schedule and increase the size of loan tranches.

Pakistan budgeted over 400 billion yen or $ 3.1 billion from the IMF in this fiscal year and its disbursement is only possible with the completion of the remaining reviews. The assessment of Pakistan’s gross financing needs was another critical area amid a 373% increase in the current account deficit in July-August this year compared to the same period last year.

The IMF wants fiscal and monetary tightening policies to be adopted by Pakistan to reverse the increase in public debt and the stability of the external sector.

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