IMF asks Pakistan to meet demands within 3 weeks to revive loan programme

International Monetary Fund has shared list of prerequisite actions with Pakistani authorities for moves towards implementing them in the next three weeks if they are keen to revive the loan programme

International Monetary Fund (IMF) has shared list of prerequisite actions with Pakistani authorities for moves towards implementing them in the next three weeks if they are keen to revive the stalled loan programme, Geo News reported.

The IMF has conveyed to Pakistan authorities that the time has come to take "all required actions", the report said.

To pave the way for a staff-level agreement and release of $1 billion tranche under the Extended Fund Facility (EFF), a timeframe of two to three weeks has been given for implementing "all required actions".

Finance Minister Ishaq Dar is expected to hold consultations for evolving consensus on required actions to be taken in the coming few weeks for the revival of the IMF programme.

The EEF is a facility offered by the IMF where a country can borrow money for addressing its structural and economic problems.

"Now the ball is in the court of Islamabad whereby the IMF asks the government to take actions on account of fixing cash-bleeding energy sector including power and gas, taking additional taxation measures and pursuing structural reforms in the remaining period of the Fund programme," a top official told The News, according to the report.

On Thursday, Pakistan and the IMF officials held another round of virtual talks, in which the Finance Minister said Islamabad was expecting to receive dollar inflows from one friendly country by late December or early January, keeping in view dwindling foreign exchange reserves held by the State Bank of Pakistan that nosedived to $6.11 billion, according to Geo News.

The sources said the Finance Ministry asked the Energy Ministry to revise the roadmap for trimming the Circular Debt Management Plan (CDMP) for 2023.

The report said IMF has agreed to grant an adjuster of Rs340 billion for hiking the budget deficit because of flood-related expenditures in the current fiscal year.

It said the Fund has also asked Pakistan to take additional measures to bridge the yawning gap for materializing the FBR's envisaged target. The IMF has assessed that the FBR might not achieve the revenue collection target of Rs7,470 billion for the current fiscal year.

According to the Financial Post, the IMF has also raised serious reservations against the recently announced package (PKR 1800 billion) by the Pakistan Finance Minister for the agriculture sector and PKR 110 billion subsidies for concessional electricity to export-oriented sectors, which is a clear deviation and violation of the 7th and 8th reviews.

The IMF asked for detailed expenditure and revenue figures, including those for flood response up to June 30, 2023, when the programme ends.

Esther Perez Ruiz, IMFs Resident Representative for Pakistan, had asked the country to review monetary and exchange rate policies. According to Ruiz, the country needs to re-examine the targets for fiscal discipline and deficit control and fix multiple economic indicators.