ISLAMABAD. Pakistan has asked the International Monetary Fund to enhance the size of its $6 billion loan programme by $2 billion and extend the fund facility programme by one year, as the global lender sought a political commitment from the country.
“We are trying to revive this 7th review the Extended Fund Facility programme which was stalled during the previous government’s tenure after the petrol and fuel relief package announced in February,” he told reporters in Washington.
The finance minister briefed the media on his meetings with the IMF board, which includes G7 members, officials from China and Saudi Arabia, and World Bank (WB) officials.
The IMF would start technical level discussions from Tuesday and the country would try to have a staff-level agreement in six to eight days after their mission arrives in Pakistan, Miftah said. Secondly, he added that the IMF had sought a political commitment from Pakistan in view of the new government t taking the helm of the country.
“So, we urged them [IMF] to extend the EFF of Pakistan, which was of three years, and make it four. So we sought a one-year extension and they were positive and it will come in staff agreement,” he said, “Before coming here we had looked into our SDR [Special Drawing Rights which is an international reserve asset] and the capacity we had is of $2 billion and we have also asked the IMF to enhance it by $2 billion. So the $3 billion which was about to come would now be $5 billion. It will be in one year.”
Moreover, he expressed hope that the global lender would also increase the first instalment of $900 million. He was of the view that the instalment increased IMF’s commitment and engagement with Pakistan.
The finance minister termed his meetings with the WB as “good”. Miftah has assured the bank of completing the three remaining conditions – including harmonisation of GST – in the RISE programme under which Pakistan is about to get $400 million.
He added that the country would also get an energy reforms package worth $600 million, adding: “We have also talked and sought assistance in the agriculture sector as our output is not enough. We still import $8 billion worth of items, including worth $3.45 billion edible oil, $2 billion of cotton and wheat.”
The Pakistan delegation led by Miftah on Sunday discussed pathways to complete the seventh review with the IMF. The delegation held several meetings with the IMF and the WB, according to a press release issued by the finance ministry.
Miftah laid out his government’s priorities and efforts to bring fiscal discipline while insulating the vulnerable from oil price volatility in the international markets. He highlighted the measures for lowering the impact of fluctuation in the global fuel prices on the poor people.
“We had very productive meetings with the Finance Minister of Pakistan Miftah Ismail over Pakistan’s economic developments and policies under the Extended Fund Facility program,” IMF Mission Chief for Pakistan Nathan Porter said in a statement.
He added that Pakistan and the IMF have agreed that “prompt action is needed to reverse the unfunded subsidies which have slowed discussions for the 7th review.” Based on the constructive discussions with the authorities in Washington, Porter said the IMF was expected to field a mission to Pakistan in May to resume discussions over policies for completing the 7th EFF review.
“The authorities have also requested the IMF to extend the EFF arrangement through June 2023 as a signal of their commitment to address existing challenges and [to] achieve the program objectives,” it read.
The new coalition government led by PM Shehbaz Sharif has stressed the need for taking tough decisions in order to boost the economy, which would be more evident after the agreement with the IMF.