Pakistan, IMF to reach staff-level agreement by next week: Ishaq Dar

Pakistan is expected to ink a staff-level agreement with the International Monetary Fund (IMF) by next week, said Federal Minister for Finance and Revenue Ishaq Dar on Thursday.

The senator took to social media, reiterating that Pakistan will not default on its payment obligations.

“Anti-Pakistan elements are spreading malicious rumours that Pakistan may default. This is not only completely false but also belie the facts,” said Dar.

The federal minister shared that the State Bank of Pakistan (SBP) foreign exchange reserves have been increasing and “are almost $1 billion higher than four weeks ago despite making all external due payments on time”.

Moreover, foreign commercial banks have also started extending facilities to Pakistan, said Dar.

“Our negotiations with IMF are about to conclude and we expect to sign Staff Level Agreement with IMF by next week. All economic indicators are slowly moving in the right direction,” he added.

Dar’s statement comes after the Pakistani rupee slumped nearly 6.6% or Rs19 against the US dollar on Thursday as the cash-strapped country struggles to unlock critical funding from the IMF amid economic turmoil.

The rupee weakened to a new record low of 285.09 per dollar.

The Pakistani economy is passing through one of its most challenging periods as it faces a balance of payments crisis.

The South Asian nation has reserves of just $3.25 billion remaining, barely enough for three weeks of essential imports. While experts are urging the government to revive the stalled IMF programme, policymakers have one eye on inflation and another on political capital as general elections loom.

Already, Islamabad has moved to implement inflation-inducing steps to appease the IMF, including higher energy tariffs and taxation measures to the tune of Rs170 billion. Still, the staff-level agreement between the IMF and Pakistan has not yet been reached.

Additionally, the SBP decided to convene an emergency meeting of the Monetary Policy Committee (MPC) on Thursday to deal with the emerging risks to the economy due to uncertain developments. It raised the key interest rate by 300 basis points, taking it to 20%.