- In short statement at conclusion of 10-day visit, IMF mission chief says resolute financial support from official partners critical for Pakistan to successfully regain macroeconomic stability and advance sustainable development
The International Monetary Fund (IMF) issued a short four-paragraph statement at the conclusion of its mission’s 10-day visit to Islamabad, stressing that while it welcomes the official commitment, “timely and decisive implementation of policies along with resolute financial support from official partners are critical for Pakistan to successfully regain macroeconomic stability”.
It added that virtual discussions will continue to finalise the implementation details of policies, implying that an agreement to revive the programme through a staff-level agreement may still take some time as Pakistan moves to execute the prior actions.
The statement came after the IMF mission, led by Nathan Porter, held discussions during January 31-February 9 to finalise the action plan under the ninth review of the IMF bailout programme.
“The IMF team welcomes the Prime Minister’s commitment to implement policies needed to safeguard macroeconomic stability and thanks the authorities for the constructive discussions,” Porter was quoted as saying in the statement.
“Considerable progress was made during the mission on policy measures to address domestic and external imbalances.
“Key priorities include strengthening the fiscal position with permanent revenue measures and reduction in untargeted subsidies, while scaling up social protection to help the most vulnerable and those affected by the floods; allowing the exchange rate to be market determined to gradually eliminate the foreign exchange shortage; and enhancing energy provision by preventing further accumulation of circular debt and ensuring the viability of the energy sector.
“The timely and decisive implementation of these policies along with resolute financial support from official partners are critical for Pakistan to successfully regain macroeconomic stability and advance its sustainable development.”
The IMF added that virtual discussions will continue in the coming days to finalise the implementation details of these policies.
The Washington-based lender’s statement comes after it was widely reported by local media and an international news agency that IMF and Pakistan have reached a consensus on reviving the bailout programme, which is crucial for the economy that is now sitting at less than $3 billion of foreign exchange reserves with its central bank.
However, the IMF, while issuing its statement, also clarified that end-of-mission press releases include statements of staff teams that convey preliminary findings after a visit to a country.
“The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. This mission will not result in a Board discussion,” it said in a note accompanying the statement.
The development suggests that there may be some time before Pakistan can officially revive the IMF programme. Experts say Pakistan would need to undertake the measures highlighted in the statement before the staff-level agreement.
On Thursday night, Secretary Finance Hamid Yaqoob Shaikh had told media persons that an agreement on actions and prior actions was reached during the technical and policy-level talks with the IMF and staff-level agreement would be reached after the approval from the IMF headquarters in Washington.
The official also acknowledged that there are some differences between the two sides and the solution does not fall within the mandate of the Fund’s mission and the staff team has to explain to their seniors with regard to internal processing of these differences.