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Thursday, May 23, 2024

No agreement reached with IMF, Pakistan continues to struggle

Pakistan failed to reach an agreement with the IMF to procure EFF and seeks assistance from the United States

To procure the Extended Fund Facility (EFF), Pakistan and International Monetary Fund (IMF) are still in struggle to reach an agreement at staff level. This has left the authorities in complexed situation to fill the gap and get the revised federal budget for the fiscal year 2022-23 agreed by the National Assembly.

Read more: Pakistan meets IMF to get funds with toughest conditions

Finance ministry was hoping to conclude Staff level agreement by Sunday (June 19) based revenue and expenditure initiatives that may possibly result in a Rs152 billion surplus in next year’s budget.

On the other hand, IMF is still concerned with over Rs9.5 trillion expenses estimated by the government department for the following fiscal year. As per IMF estimations, the budget’s revenue measures are also inadequate to provide slightly above the target of Rs7 trillion.

Read more: IMF dictates fiscal policies to Pakistan

As reported by Dawn news, a senior finance executive from the ministry assured on Sunday that first draft of memorandum of economic and financial policies (MEFP) has not yet been received from the IMF since some issues are still unresolved. The executive said, “We are working very closely with the IMF and will soon reach some conclusion.”

According to the schedule of the finance ministry, the government is planning to have the budget for 2022-23 approved by the National Assembly. To do so, it must strike an agreement with the IMF, ensuring that the agreed-upon measures are maintained in the budget. In any case, parliament must pass the budget by July 28 to enable its legal implementation with effect from July 1, as mandated by the Constitution.

IMF talks: Pakistan looks for US assistance

Dawn was being told by the diplomatic sources on Sunday that the United States (US) has consented to provide assistance to Pakistan for reaching a deal with the IMF.

In past, media reports had shown that Islamabad was “seeking Washington’s support” in order to renew its EFF with the IMF. Being the major shareholder, US has substantial impact over the decisions of IMF.

In July 2019, Pakistan agreed to a 39-month EFF of $6 billion, but the fund halted the payment of around $3 billion when the former government failed to fulfill its commitments.

Now, Islamabad wants the IMF to increase the scope and duration of the program and resume payments.