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Wednesday, May 22, 2024

Pakistan asks IMF for restructuring ‘pause’

Shehbaz Sharif said he was trying to persuade the International Monetary Fund (IMF) to give Islamabad some breathing space as it tackles the "nightmarish" situation.

Pakistan’s prime minister on Monday asked the IMF for a pause in its demands for economic reforms before releasing more financial aid, as the country tries to rebuild after catastrophic floods.

Shehbaz Sharif said he was trying to persuade the International Monetary Fund (IMF) to give Islamabad some breathing space as it tackles the “nightmarish” situation.

The global lender wants Pakistan to withdraw remaining subsidies on petroleum products and electricity, aimed at helping the population.

Pakistan’s economy has crumbled alongside a simmering political crisis, with the rupee plummeting and inflation at decades-high levels, but the floods and the global energy crisis have piled on further pressure.

Read more: IMF urges Pakistan to end subsidies?

Sharif came to office in April last year, ahead of the floods in July and August.

A $6-billion IMF deal negotiated by the previous government was restarted after Pakistan finally met conditions such as ending subsidies on fuel.

But Islamabad has so far only received half the funds — the last payment in August — with a further review of the package ongoing.

At the United Nations in Geneva for a conference on Pakistan’s recovery from last year’s catastrophic monsoon floods, Sharif was asked by reporters about the block on IMF funds.

“Even before these floods hit Pakistan, we were already facing humongous challenges,” he said.

“Yet we had to again connect with the IMF and resurrect an agreement which was violated by the previous government — and accept even harsher conditionalities,” said Sharif.

He said Pakistan was complying with the IMF’s conditions “as best as possible” but asked “how on Earth” the additional burdens could be shouldered by the country’s poorest.

“Yet we are committed to IMF’s programme. We will do everything to comply with the terms and conditions. Though I am constantly trying to persuade them: please give us a pause,” he said.

Read more: IMF Resumes its Extended Fund Facility for Pakistan

– ‘Be considerate’ –

Sharif spoke with IMF Managing Director Kristalina Georgieva on Saturday and asked her to “kindly be considerate and compassionate and give us some breathing space”, he said.

“This is an ongoing dialogue. I’m sure one day soon we will be able to convince them through logic and through facts.

Finance Minister Ishaq Dar was due to meet an IMF delegation in Geneva on Monday, a Pakistani minister confirmed to AFP on condition of anonymity.

Foreign Minister Bilawal Bhutto Zardari told AFP in an interview he was “confident” that Dar would land the deal.

He said Pakistan was “committed to the broad economic reform that is required and we are committed to the IMF programme”, he said.

He acknowledged that the devastation from the floods had “knocked us off centre, which does mean we need a little bit more time”.

But he dismissed a question about Pakistan’s prospects of obtaining financing if the IMF deal falls through.

“I can envision a scenario where we may have the IMF plus friendly countries, but I don’t see any scenario that does not include the IMF,” he said.

Economists and traders estimate the country has around three weeks of foreign exchange reserves left to service imports and a swift IMF cash injection is the only way to shore up the economy.

At the Geneva conference, Britain encouraged Pakistan to continue its macroeconomic reforms and conclude the ninth review of the IMF programme.

Development Minister Andrew Mitchell said it would be much easier for the world to help Pakistan “if Pakistani taxpayers are seen to be playing a core part in this effort”.