- Programme has been stalled at the ninth review since November last year with statements from officials insisting bailout is on track and will be revived soon
Amid an incessant delay in revival of the bailout programme, Pakistani authorities are now hopeful of inking a deal with the International Monetary Fund (IMF) before they unveil the budget on June 9 (Friday), said the Ministry of Finance in an emailed response to questions from Bloomberg.
Pakistan has lined up $4 billion in external financing and hopes to obtain a deal with the lender before it unveils its budget on Friday, the Ministry of Finance in Islamabad was quoted as saying in the report.
Islamabad is now in chase of securing the remaining $2 billion in external funding gap out of a $6-billion target to revive the stalled bailout, added the Bloomberg report on Tuesday.
“Pakistan remains committed to completing the IMF programme and has already demonstrated its seriousness,” the ministry said.
“Pakistan is committed to mobilising additional liquidity despite significant contraction of the current-account deficit which has reduced the requirement,” it added.
The IMF had earlier insisted that Pakistan needs to meet its external financing gap, which many estimated to be at $6 billion, and reiterated its stance earlier in May after Islamabad said it has secured $3 billion in commitments.
While the Bloomberg report quoted the finance ministry as saying that the country had lined up $4 billion, the remaining amount of $1 billion was not attributed to any multilateral or bilateral financing partner.
Pakistan’s bailout programme with the IMF has been stalled at the ninth review, while talks on the staff-level agreement have dragged on over securing necessary financing assurances to bridge the balance of payments gap.
In addition to securing $4 billion in commitments, according to the finance ministry’s latest statement to Bloomberg, China and its state-owned banks have rolled over $2 billion in loan commitments, and refinanced another $2 billion separately.
Meanwhile, Esther Perez Ruiz, the IMF’s resident representative for Pakistan, in an emailed response to Bloomberg on Monday said the loan will resume once there is “proper market functioning” of the Pakistani rupee and the government follows IMF programme goals and adequate financing when it presents the national budget.
Separately, Ruiz, while responding to Business Recorder questions, confirmed that the government of Pakistan shared some of the details of the fiscal year 2023-24 budget with the IMF.
She stated: “Some details of the fiscal year 2024 budget have been shared with IMF over the past week, and we have engaged in discussions around this information and the government’s budget plans.
“IMF staff looks forward to furthering the discussions to identify spending and revenue measures that can strengthen debt sustainability prospects while increasing social spending further to defray the impact of the ongoing inflationary pressures on the most vulnerable.
“IMF staff continues the engagement with the Pakistani authorities to pave the way for a Board meeting before the current program expires at end-June, focused on the restoration of foreign exchange (FX) proper market functioning, the passage of a fiscal year 2024 budget consistent with program goals, and adequate financing,” Perez told Business Recorder.
Economic experts have repeatedly stressed on resumption of the IMF programme, terming it crucial for the debt-ridden economy, facing dwindling foreign exchange reserves and record high inflation.
“Pakistan will struggle to muddle through much longer without a programme given its limited reserve buffers and elevated external financing needs,” said Patrick Curran, a senior economist at Tellimer based in Portland, Maine, told Bloomberg.
“Default is inevitable if IMF support is not secured.”
Pakistan’s foreign exchange reserves with its central bank currently stand at $4.09 billion as of May 26, latest data shows.