As the new fiscal year approaches, the government is making significant efforts to reach an agreement with the International Monetary Fund (IMF). In this regard, initial budget proposals have been shared with the IMF for review.
The IMF will carefully evaluate these proposals and engage in discussions with officials from the Finance Ministry to assess their feasibility and alignment with the desired economic goals.
It is being suggested to allocate a substantial amount of up to Rs8000 billion to cover debt and interest payments. This allocation reflects the government’s commitment to managing its financial obligations effectively.
The IMF, however, remains in touch with Pakistan’s authorities in order to pave the way for a board meeting before a financing program expires at the end of June, the IMF mission chief for Pakistan said.
Ordinarily, a board meeting on a review of the program would require a prior staff-level agreement, which in Pakistan’s case would unlock $1.1 billion in financing for the cash-strapped South Asian nation as part of a $6.5 billion IMF package.
The staff-level agreement has been delayed since November, with more than 100 days since the last staff-level mission to Pakistan, the most prolonged delay since at least 2008.
“This engagement will focus on restoring foreign exchange proper market functioning, the passage of a FY24 budget consistent with program goals, and adequate financing,” IMF mission chief Nathan Porter said.
Pakistan wants to complete the current program with the IMF by June 30, after which the country is also looking for negotiation for the next program.
Earlier, Finance Minister Ishaq Dar on Monday became angry at questions hurled by journalists that was it his failure not having a (Staff Level Agreement) agreement with the IMF.
Visibly angry Dar refused to answer questions on the new budget and the IMF (deal).
Dar said he would like the IMF to clear its 9th review before the budget, which is due to be presented in early June, as all the conditions for that had already been met.
The IMF funding is crucial for the $350 billion South Asian country, which faces an acute balance of payments crisis. This has raised concerns of a sovereign default, something which the minister dismissed.
The central bank’s foreign reserves have fallen as low as to cover barely a month of controlled imports. Pakistan’s economy has slowed, with an estimated 0.29% GDP growth for 2022-2023.