Pakistan, IMF fail to reach staff level agreement on stalled bailout packageGovt, IMF agree to a broad framework aimed at satisfying the lender of the last resort in the coming days
Shahbaz RanaFebruary 09, 2023
Pakistan and the International Monetary Fund failed to reach a staff level agreement on Thursday but agreed to a broad framework aimed at satisfying the lender of the last resort in coming days.
“Actions and prior actions have been agreed, but the staff level agreement will be signed subsequently,” said Secretary Finance Hamed Yaqoob Sheikh while confirming that the IMF mission is leaving early Friday morning.
Finance Minister Ishaq Dar cancelled his media briefing due to the collapse of the talks.
The IMF discussed the draft of the Memorandum for Economic and Financial Policies just before the end of the scheduled review talks, leaving no room for the staff level agreement on the same day.
To break the deadlock, an unscheduled virtual meeting was held between Prime Minister Shehbaz Sharif and IMF Mission Chief Nathan Porter.
Also read: Foreign exchange reserves fall below $3b to nine-year low
For clinching the MEFP and the Staff level agreement, the government eventually conceded to almost every demand by the IMF.
The Fund has rejected the “gradual approach” proposal of Pakistan, saying everything has to be done upfront.
The broad consensus is on leaving the US dollar on the market forces, significantly increasing interest rates and electricity prices, and imposing new taxes.
Due to the severity of economic crisis, every agreed measure would be tough on most Pakistanis.
Earlier, Express News citing sources had reported that the government had reached a consensus with the IMF mission over the terms of the stalled bailout package. It reported that Dar was expected to announce details of the negotiations in a press conference, but the finance minister later cancelled his media briefing due to the eventual collapse of the talks.
Dar said earlier on Thursday that "matters will be settled today" with the IMF and that the people will soon hear “good news”.
The IMF mission had been in Islamabad since Jan 31 to sort out differences over the government's fiscal policy that had stalled the release of over $1 billion from the $6.5 billion bailout package signed in 2019.
External funding is crucial for the $350-billion Pakistan economy facing a balance-of-payments crisis with the country's foreign exchange reserves slipping below $3 billion for the first time in nine years on Thursday, reducing import capacity to just over two weeks.
2 minute readFebruary 9, 20232:40 PM CSTLast Updated an hour ago
IMF seeks more time to conclude Pakistan deal worth $1.1 billionBy Ariba Shahid
[1/2] Pakistan's Finance Minister Ishaq Dar gestures during a news conference to announce the economic survey of fiscal year 2016-2017, in Islamabad, Pakistan, May 25, 2017. REUTERS/Faisal Mahmood
KARACHI, Feb 9 (Reuters) - The International Monetary Fund has asked for more time for negotiations with Pakistan over a deal that would unlock $1.1 billion in much-needed funds for the country, Secretary of Finance Hamed Sheikh said Thursday. Cash-strapped Pakistan, pushed to the limit by last year's devastating floods, had been host to the talks since late last week in a bid to access the funds, a tranche initially expected last December and part of the IMF's $6.5 billion bailout aimed at warding off an economic meltdown.
"The staff level agreement between Pakistan and IMF will be reached soon," Sheikh, a senior official at the Ministry of Finance, said in a statement to Reuters. "The IMF mission asked for more time for staff-level negotiations."
He said both sides had agreed on "actions and advance measures." The staff-level talks were due to conclude on Thursday.
IMF seeks more time to conclude Pakistan deal worth $1.1 billion
The International Monetary Fund has asked for more time for negotiations with Pakistan over a deal that would unlock $1.1 billion in much-needed funds for the country, Secretary of Finance Hamed Sheikh said Thursday. Cash-strapped Pakistan, pushed to the limit by last year's devastating floods...