IMF talks to focus on growth, governance
KARACHI: An International Monetary Fund (IMF) mission will meet Pakistani authorities in the next few days to discuss a probable long-term loan programme, an official said on Sunday.
Speaking to Dawn.com, Esther Perez Ruiz, the Fund’s resident representative for Pakistan, said: “A mission team led by Nathan Porter, IMF’s mission chief to Pakistan, will meet with authorities next week to discuss the next phase of engagement.”
“The aim is to lay the foundation for better governance and stronger, more inclusive, and resilient economic growth that will benefit all Pakistanis.”
Last month, Pakistan completed a short-term $3 billion Standby Arrangement programme, with the State Bank of Pakistan receiving the final $1.1 billion tranche.
Lender’s Pakistan mission chief to lead the team for discussion on ‘next phase of engagement’
The programme, signed in 2022, helped stave off sovereign default, but the government has stressed the need for a fresh, longer-term programme.
Reuters reported last week that a Fund’s mission was expected in Pakistan “to discuss the FY25 budget, policies, and reforms under a potential new programme”.
Pakistan narrowly averted default last summer, and the $350bn economy has stabilised after the completion of the last IMF programme, with inflation coming down to around 17 per cent in April from a record high 38pc last May.
Pakistan is expected to seek at least $6bn and request additional financing from the Fund under the Resilience and Sustainability Trust.
On Friday, the Fund said that downside risks for the economy remain exceptionally high.
“Downside risks remain exceptionally high. While the new government has indicated its intention to continue the SBA [standby arrangement] policies, political uncertainty remains significant,” the lender had said in its staff report following the second and final review under the standby agreement.
The Fund added that political complexities and high cost of living could weigh on policy, adding that policy slippages, together with lower external financing, could undermine the narrow path to debt sustainability and place pressure on the exchange rate.
The IMF also said higher commodity prices and disruptions to shipping, or tighter global financial conditions, would also adversely affect external stability for the cash-strapped nation.
Published in Dawn, May 13th, 2024