Pakistan is restrategising to meet the requirements set by the International Monetary Fund to acquire funding from the global lender, as the body rejects its request for a loan.
Pakistan’s request to lower the requirement of securing six billion dollars in additional loans had been denied by the International Monetary Fund (IMF), leaving the government with no choice but to try to salvage the agreement to meet the loan requirement.
A cabinet member, the Minister of State for Finance, Dr Aisha Pasha, disclosed this in a policy statement delivered during a session of the National Assembly Standing Committee on Finance.
Dr. Pasha stated that Pakistan asked the IMF to take into account lowering the six billion dollars external funding requirement based on fresh data on the current account deficit, but was declined.
“The other USD 3 billion was to be arranged after the staff-level agreement, she said, but the IMF insisted on demonstrating the USD 6 billion,” she said.
She added that there was an understanding to arrange USD 3 billion before the agreement.
“There is no option other than going back to the IMF, and I categorically say there is no Plan B,” when asked if there was a backup strategy in the event that negotiations with the IMF fall through.’’
She emphasised that the government wanted to continue the IMF programme.
“The PM’s decision to create eight different budget committees prevented the budget strategy paper for the fiscal year 2023-2024 from being finished in time for the meeting,” according to Dr. Pasha.
Dr Pasha asserted that Saudi Arabia, the United Arab Emirates, the World Bank, and Geneva Commitments had made arrangements for Pakistan to receive USD 4.5 billion.
She pointed out that only after the staff-level agreement is reached can the remaining USD 1.5 billion be set up as Pakistan has shared its fiscal year 2020 budget with the IMF, and the government is awaiting the lender’s feedback with a budget that is generally in compliance with IMF recommendations.
According to the statement from the Finance minister, the IMF has not altered its position despite a call from Prime Minister Shehbaz Sharif to IMF Managing Director Kristalina Georgieva.
The IMF had already paid USD 3.9 billion of the overall USD 6.5 billion rescue package during the past four years, with the remaining amount depending upon the conclusion of three outstanding reviews.
According to the figures, the IMF might demand that Pakistan significantly raise its revenue projections and cut back on some expenses as the proposed primary budget surplus is insufficient to meet IMF standards.
