Economic reforms: Pakistan asks IMF for restructuring ‘pause’

GENEVA: Pakistan’s prime minister on Monday asked the IMF for a pause in its demands for economic reforms before releasing more financial aid, as the country tries to rebuild after catastrophic floods.

Shehbaz Sharif said he was trying to persuade the International Monetary Fund (IMF) to give Islamabad some breathing space as it tackles the “nightmarish” situation.

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The global lender wants Pakistan to withdraw remaining subsidies on petroleum products and electricity, aimed at helping the masses.

At the United Nations in Geneva for a conference on Pakistan’s recovery from last year’s catastrophic monsoon floods, Shehbaz was asked by reporters about the block on IMF funds.

Pakistan’s economy has crumbled alongside a simmering political crisis, with the rupee plummeting and inflation at decades-high levels, but the floods and the global energy crisis have piled on further pressure.

Shehbaz came to office in April last year, ahead of the floods in July and August.

A $6-billion IMF deal negotiated by the previous government was restarted after Pakistan finally met conditions such as ending subsidies on fuel.

But Islamabad has so far only received half the funds – the last payment in August – with a further review of the package ongoing.

“Even before these floods hit Pakistan, we were already facing humongous challenges,” he said.

“Yet we had to again connect with the IMF and resurrect an agreement which was violated by the previous government – and accept even harsher conditionalities,” said Shehbaz.

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He said Pakistan was complying with the IMF’s conditions “as best as possible” but asked “how on Earth” the additional burdens could be shouldered by the country’s poorest.

“Yet we are committed to IMF’s programme. We will do everything to comply with the terms and conditions. Though I am constantly trying to persuade them: please give us a pause,” he said.

‘Be considerate’

Shehbaz spoke with IMF Managing Director Kristalina Georgieva on Saturday and asked her to “kindly be considerate and compassionate and give us some breathing space”, he said.

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“This is an ongoing dialogue. I’m sure one day soon we will be able to convince them through logic and through facts.

“That said, regardless, we will comply with the IMF programme.”

Finance Minister Ishaq Dar is due to meet an IMF delegation in Geneva on Monday, a Pakistani minister confirmed to AFP on condition of anonymity.

Economists and traders estimate the country has around three weeks of foreign exchange reserves left to service imports and a swift IMF cash injection is the only way to shore up the economy.

At the Geneva conference, Britain encouraged Pakistan to continue its macroeconomic reforms and conclude the ninth review of the IMF programme.

Development Minister Andrew Mitchell said it would be much easier for the world to help Pakistan “if Pakistani taxpayers are seen to be playing a core part in this effort”.