As of late, Pakistan has been pushed by the International Monetary Fund (IMF) to resolve its political conflicts in line with the constitution. Prime Minister Shehbaz Sharif made this declaration after contacting IMF Managing Director Kristalina Georgieva in a desperate attempt to salvage the failed $6.5 billion rescue plan and prevent default.
After Shehbaz and Georgieva’s talk, Nathan Porter, the IMF’s mission chief in Pakistan, made an unprecedented statement that shifted the IMF’s attention to the political sphere.
Porter stressed the significance of finding a peaceful solution in accordance with the constitution and the rule of law, even though the IMF normally avoids intervening on domestic politics. This declaration was made in the middle of continuing political unrest, crackdowns on PTI employees, and kidnappings of people.
Porter provided details of the requirements Pakistan must meet in order to achieve an agreement with the IMF in response to inquiries from The Express Tribune. These requirements include setting up foreign loans, passing a new budget that adheres to the IMF’s guidelines, and getting the foreign currency market back to normal operation.
The IMF, according to Prime Minister Shehbaz, is the final choice for preventing default, thus he chose to step in. He gave the finance ministry instructions to inform the IMF of the upcoming budget’s specifics after his talk with the IMF’s director.
Ishaq Dar, the finance minister, blasted the IMF once more in the meanwhile, saying that delaying the 9th review would be dishonourable and biased. A senior member of the finance ministry did, however, disclose that the prime minister had spoken with the IMF managing director to resolve the impasse.
Pakistan has just one month until the programme expires, so time is running short. The IMF can accelerate the review completion period, according to Pakistani officials, by convening a board meeting within two weeks of announcing the staff-level agreement.
Porter stressed that for Pakistan to preserve macroeconomic stability, maintaining solid policies, securing adequate finance from partners, and engaging in continuous reforms are essential. He also emphasised the significance of improving domestic income mobilisation, decreasing losses at state-owned enterprises, cutting waste, and enabling more social and development investment.
Since November of last year, the $6.5 billion bailout programme has stalled and is due to end on June 30. The IMF has not released $2.6 billion of the overall amount, including a $1.2 billion tranche tied to the conclusion of the 9th review. Pakistan now has $4.1 billion in foreign exchange reserves, which is insufficient to satisfy the expected $25 billion in repayments.
Regarding the current account deficit for this fiscal year, there are still divergent views. The IMF has not yet agreed to the government’s revised estimate of $4 billion to $4.5 billion.