Deadlock persists between Pakistan, IMF on budget


IMF seeks cut in govt expenditures in fresh contact with Pakistan
The deadlock persists between Pakistan and the International Monetary Fund on the budget. According to sources, virtual negotiations were held between Pakistan and the IMF, but no major progress could be made between them.
Pakistan urged the global lender to sign staff level agreement soon. The IMF, however, indicated to combine the 9th and 10th reviews. On the other hand, Pakistan first wanted to complete the 9th review only.
According to sources in the finance ministry, budget numbers were also discussed with the IMF. The Fund made a demand to increase the FBR revenue target up to Rs10,000 billion. The Pakistani delegation, however, suggested the FBR revenue target of Rs9,200 billion. The Federal Board of Revenue opposed the idea of increasing the revenue target on a large scale.
Minister of State for Finance Aisha Ghaus Pasha participated in the virtual talks along with the economic team. However, Finance Minister Ishaq Dar did not participate in the talks, sources informed.
According to a Bloomberg report on Tuesday, Pakistan is pursuing efforts to secure the remaining $2 billion in external funding gap out of a $6 billion target to revive a long-delayed bailout program with the International Monetary Fund.
The South Asian nation has lined up $4 billion in external financing and hopes to obtain a deal with the lender before it unveils its budget on Friday, the Ministry of Finance in Islamabad said Monday in an emailed response to questions from Bloomberg News. “Pakistan remains committed to completing the IMF programme and has already demonstrated its seriousness,” the ministry said.
Saudi Arabia and the United Arab Emirates have committed to provide $3 billion to Pakistan in external financing. China and its state-owned banks have also rolled over $4 billion in loan commitments.
In an email to Bloomberg, IMF’s Resident Representative for Pakistan Esther Perez Ruiz said the programme would restart once the authorities follow the lender’s programme goals, present adequate financing while presenting the budget, and there is “proper market functioning” of the Pakistani rupee.
“IMF staff continues the engagement with the Pakistani authorities to pave the way for a Board meeting before the current programme expires,” said the official.