IMF to end talks with Pakistan

Pakistan expects to conclude IMF staff-level talks soon. This will unlock funds to battle the economic crisis. The fiscal adjustments demanded are likely to fuel record-high inflation.

ISLAMABAD: Pakistan expects to conclude talks with the International Monetary Fund over a staff-level agreement as soon as this week. The country’s finance secretary said this is a crucial step toward unlocking funds to battle the economic crisis. The IMF will end its talks with Pakistan.

An IMF mission spent more than a week in Islamabad earlier this month. They discussed a policy framework to allow the release of more than US$1 billion in funding. This funding is part of a stalled US$6.5 billion bailout package, originally approved in 2019. The IMF will end its talks with Pakistan.

However, the mission left without a conclusion.

“The consultations with the IMF are in the final stages. We expect to conclude the consultations soon, even within the week” Hamed Yaqoob Sheikh, the top official in the finance ministry, told Reuters.

The IMF’s local representative didn’t respond to a Reuters request for a comment.

The staff level agreement would need approval from the IMF’s board before the funds can be released.

Since late last year, policy issues have held up the financing package. The IMF has requested a series of fiscal adjustments, including the removal of subsidies, increasing fuel prices, and raising more taxes to bridge a revenue shortfall.

Pakistan has taken steps, such as raising more than 170 billion Pakistani rupees (US$647.62 million) through a supplementary finance bill passed by the parliament on Monday.

Officials say that other measures needed to finalize the agreement include raising interest rates, which already stand at 17 percent. They also need to obtain commitments for more bilateral and multilateral funding.

The IMF funds are critical for the US$350 billion South Asian economy, which is facing a severe balance of payments crisis. The fiscal adjustments demanded by the deal, however, are likely to fuel record high inflation, which hit 27.5 per cent year-on-year in January, analysts say.

Source: CNA