The IMF’s ‘condition’ that is impeding Pakistan’s rescue agreement

(Reuters) – The International Monetary Fund (IMF) is collaborating with Pakistani authorities to complete the ninth assessment of a bailout plan, according to the mission commander.

He said that money was essential for the cash-strapped nation to avoid economic disaster. Pakistan and the IMF have been debating fiscal policy measures since February in order to restart the halted cash that was due in November under the $6.5 billion bailout agreed with in 2019.

The funds are critical for Pakistan, which is in the midst of a balance-of-payments crisis, to avoid defaulting on its foreign payment commitments. Pakistan’s central bank’s foreign currency reserves have fallen to cover just four weeks of regulated imports.

“The IMF continues to work with the Pakistani authorities to complete the ninth review once the necessary financing is in place and the agreement is finalised,” said mission commander Nathan Porter in a statement.

“The IMF assists the authorities in implementing policies in the coming period, including technical work to prepare the FY24 budget, which is expected to be passed by the National Assembly before the end of June.”

The finance ministry of Pakistan did not immediately reply to a request for comment.

Pakistan has assured that its balance of payments imbalance this fiscal year, which ends in June, would be completely paid as part of a series of conditions.

Pakistan has promised $3 billion in finance help from Saudi Arabia and the United Arab Emirates, but the money have yet to arrive. China, a long-time friend, has rolled over and refinanced its debts to Islamabad.

Pakistan completed a series of IMF-mandated actions, including reversing subsidies, raising energy and fuel prices, raising its key policy rate, switching to a market-based currency exchange rate, securing external financing, and raising over Rs170 billion ($613 million) in new taxes.

Fiscal adjustments have already contributed to record-high inflation, which reached 36.4 percent in April.

Before the end of the IMF plan in June, Pakistan will get another $1.4 billion.