IMF says will reach staff-level agreement with Pakistan ‘soon’

A woman walks past a building of the International Monetary Fund. — AFP/File

ISLAMABAD: As Pakistan faces one of its worst economic turmoils in recent history, the International Monetary Fund (IMF) Wednesday expressed confidence in reaching a staff-level agreement (SLA) soon with the nation as the government struggles to avoid a possible default.

IMF Director Middle East and Central Asia Department Jihad Azour’s made the comments during a meeting with the Pakistani delegation, which is present in the United States to attend the IMF/World Bank Spring meetings.

Federal Minister for Finance and Revenue Senator Mohammad Ishaq Dar attended the meeting through Zoom from Islamabad, a statement from the Finance Division said.

“Jihad Azour […] expressed his confidence that Staff Level Agreement (SLA) will be signed soon followed by the IMF Board’s approval,” the statement mentioned, which comes as a ray of hope for the struggling country.

Azour hoped that Pakistan would continue towards its progress on the reforms in various sectors and complete the programme in time and “IMF will play its positive role in bringing economic stability in Pakistan”.

Pakistan has completed all prior actions required for securing the IMF loan tranche and the only reason behind the stall in the programme is commitments from friendly countries.

The $350 billion economy is getting closer to securing the loan as Saudi Arabia has already committed $2 billion in funds, while sources said the United Arab Emirates (UAE) is likely to assure the global lender that it will provide $1 billion to Pakistan by this week.

The funds are part of a $6.5 billion bailout package the IMF approved in 2019, which analysts say is critical for Pakistan to avert defaulting on external payment obligations.

The deal will also unlock other bilateral and multilateral financing avenues for Pakistan to shore up its foreign exchange reserves, which have fallen to four weeks’ worth of import cover, and help it steer out of a balance of payment crisis.

As the situation remains gloomy, IMF has cut Pakistan’s growth forecast to 0.5% from the 2% estimate earlier as the nation faces a dollar shortage, leading to supply chain disruptions and companies stopping production.

During today’s meeting, the two sides discussed the progress made with the ongoing IMF programme, particularly talks held with the IMF mission during their visit to Pakistan and the implementation of prior actions.

The finance minister informed the Fund officials that due to local important commitments, Prime Minister Shehbaz Sharif asked him to remain in Pakistan, forcing him to cancel his scheduled visit to Washington DC.

He apprised the IMF team about the economic challenges being faced by the country. Dar further shared the government’s vision for bringing about macroeconomic stability in the country.

FinMin Dar also informed that all prior actions for the ninth review under the Extended Fund Facility have already been completed and the government is fully committed to fulfilling its obligations as agreed with the IMF. 

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