Thursday, June 30, 2022

Pakistan opens talks with IMF to resume suspended funds for economy

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ISLAMABAD: Pakistan opened much delayed talks with the International Monetary Fund (IMF) on Wednesday to resume a seventh review of the $6 billion rescue package agreed in 2019.

“Talks with the IMF mission started today,” a statement from the finance ministry said. It said a team led by Finance Minister Miftah Ismail and the central bank’s acting governor will join the talks virtually.

A finance division team has already left for consultations with the IMF in Doha, the ministry said. The talks will continue until May 25 before the IMF takes a decision.

The South Asian nation is in dire need of external funds, with foreign reserves falling to as low as $10.3 billion and a widening current account deficit.

Pakistan has already requested the lender to increase the size and duration of its $6 billion programme.

Ismail made the request in his visit to Washington last month, which was followed by a statement from the IMF, which said Islamabad had agreed to roll back unfunded subsidies to the oil and power sectors.

From March to June, Pakistan is expected to give out around $2 billion of the subsidies, which haven’t been withdrawn so far despite its agreement with the IMF.

The new government that took over last month from ousted Prime Minister Imran Khan fears a public backlash if it withdraws the subsidies. It has said it was facing an enormous economic challenge.

About half of the $6 billion in assistance has been distributed to Pakistan so far, but more recent payments were delayed several times due to the IMF’s concerns over monetary policy measures.

If the current review is cleared, Pakistan will get more than $900 million, which will also unlock other external finances.

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