The IMF wants Pakistan to provide guarantees on funding the balance of payments deficit.

KARACHI (Reuters) – According to the lender’s resident representative, Pakistan would be asked to provide evidence that its balance of payments deficit is adequately covered for the remainder of an IMF programme.

The external financing is one of the last steps the lender wants Islamabad to take before clearing cash that has been blocked since late last year, Esther Perez Ruiz told Reuters in an e-mailed response on Monday.

After more than a month of discussions to address policy framework problems aimed at reducing the fiscal deficit ahead of the annual budget in June, Pakistan wants to reach a staff level agreement with the IMF.

Apart for the external funding requirement imposed by the IMF for clearing $1.1 billion in payments under the $6.5 billion Extended Fund Facility agreed in 2019, Pakistan has accomplished practically all of the earlier steps.

The scheme will finish in June. “All IMF programme reviews need solid and credible guarantees that there is adequate funding to ensure that the borrowing member’s balance of payments is fully funded during the duration of the programme.

“Pakistan is no different,” said Ruiz of the IMF. Finance Minister Ishaq Dar said last week that the external financing promise was not one of the IMF’s requirements for funding approval.

He claimed Pakistan required $5 billion in external finance for its balance of payments deficit in the fiscal year ending June 30, while the IMF thought it should be $7 billion.

The IMF delegate also said that Pakistan was committed to aligning its official and informal foreign exchange market rates, only days after the cash-strapped country’s currency plummeted drastically.

A permanent power fee on customers was also one of the measures envisaged by Pakistani authorities to reduce energy sector debt, she added.