As part of a long-awaited bailout tranche from the lender for the cash-strapped country, the International Monetary Fund (IMF) is getting ready to discuss Pakistan’s budget plans for the upcoming fiscal year, the IMF’s Pakistan mission chief told Reuters on Thursday.
Before the IMF approves a staff-level agreement to release $1.1 billion in funding that has been delayed for months and is essential for Pakistan to resolve a severe balance of payments crisis, negotiations over important budget targets like the fiscal deficit are one of the last obstacles to clear.
A successful staff level agreement (SLA) for the 9th review, which has been pending since November, will unlock the $1.1 billion tranche.
The funding is a part of a $6.5bn bailout package the IMF approved in 2019, which is due to end in June, prior to the budget.
“In all IMF programmes, the authorities issue a letter of intent associated with the last review outlining their policy intentions for the period after the programme,” said Nathan Porter, mission chief to Pakistan.
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The funding is a part of a $6.5bn bailout package the IMF approved in 2019, which is due to end in June, prior to the budget.
While negotiations with the IMF to secure a $1.1 billion tranche have fallen through, Pakistan’s economy has been in turmoil for months due to an acute balance of payments crisis.
A record 36.4 percent inflation rate was reached in April compared to the same month last year, primarily due to soaring food and energy prices.
According to the finance ministry’s forecast, the devaluation of the rupee and rising administered prices, both of which led to an increase in overall costs, would keep inflation in the 36–38 percent range.
