ISLAMABAD: Finance Minister Miftah Ismail has stated that Pakistan has received a memorandum of economic and financial policies for the combined 7th and 8th reviews of the Extended Fund Facility (EFF) after fulfilling the conditions of the Fund with regard to the budget for the next fiscal year.
The finance minister tweeted that “early this morning, the Government of Pakistan has received Memorandum of Economic and Financial Policies (MEFP) from the IMF for combined 7th and 8th reviews”.
Ismail said that Pakistan would be getting $1.9 billion soon from the IMF as an understanding has been reached to release both the instalments together under the seventh and eighth review.
In an informal chat with media here on Tuesday, the finance minister explained that the country would receive $900 million under the seventh review and $1 billion under the eighth review. He further maintained that the country would be disbursed money soon. The finance minister stated that the primary deficit for the next fiscal would be Rs152 billion surplus and this may have been agreed with the Fund apart from increasing utility prices by withdrawing subsidies.
Reuters adds: Pakistan said on Tuesday that it has received economic and financial targets from the International Monetary Fund (IMF) that once agreed and ratified should pave the way for multilateral lender to unlock a suspended bailout programme.
Pakistan desperately needs the money to avert a balance of payment crisis that is being brought closer by the day as result of the sharp rise in global oil and commodity prices.
Central bank foreign currency reserves have fallen to as low at $8.2 billion, barely enough to cover six weeks of imports, and the economy is reeling from a sharp depreciation in the Pakistani rupee and double-digit inflation.
Pakistan entered a $6 billion IMF programme in 2019 spread over three years and three months, but with less than half the amount disbursed the IMF suspended the bailout earlier this year after the previous prime minister, Imran Khan, announced unfunded subsidies for the oil and power sectors. Khan’s government was ousted in April.
Needing to get back in the IMF’s good graces, the new government, led by Shehbaz Sharif, has removed the subsidies, and made adjustments in a budget presented on June 10 that aimed at reducing the government’s fiscal deficit, which was one of the IMF’s key requirements.
Delivering an update following talks between Pakistani and IMF officials, Finance Minister Miftah Ismail said in a tweet that government had received the IMF’s Memorandum of Economic and Financial Policies (MEFP) containing economic and fiscal targets under the seventh and eighth reviews of the programme.
Significantly, having the two reviews completed at the same time raises the prospect of $1.9 billion being disbursed once the IMF board gives the all clear to resume the bailout programme.
“I got a message from the finance minister early morning that we could get $2 billion from the IMF instead $1 billion,” Prime Minister Sharif said while addressing an economic seminar in Islamabad on Tuesday.
Once the IMF clears the next tranche, it should open up other external finance avenues for Pakistan to shore up its reserves.
Copyright Business Recorder, 2022