IMF wants Pakistan to ‘do more’ before staff-level agreement


The International Monetary Fund has demanded Pakistan ‘do more’ before agreeing on the staff-level agreement for resumption of a billion-dollar loan program.
Despite receiving confirmation from Saudi Arabia and the United Arab Emirates (UAE), the IMF has now asked Pakistan to arrange $8 billion in fresh loans to back the external debt repayments during the next seven months for a successful completion of the long-stalled ninth review bailout package.
Pakistan has to satisfy the IMF regarding repayment arrangements for loans worth $8 billion by December 2023. During May and June 2023, Pakistan has to repay external debt of $3.7 billion.
The IMF sought an assurance for an additional $2.4 billion, sources in the Finance Ministry said.
Pakistan has to ensure roll-over from China to repay another $2.4 billion in loans, the sources said added. They also said Pakistan had earlier assured funding of $3 billion from China.
The sources further said funding of $2 billion has also been assured from Saudi Arabia, and $1 billion from the UAE. The IMF also expressed dissatisfaction over the collection of petroleum development levy falling short of target. In nine months, petroleum development levy of Rs362.48 billion was collected, the Finance Ministry said.
In the current fiscal year, the overall target for the petroleum development levy is Rs855 billion.
A staff-level accord to release a $1.1 billion tranche out of a $6.5bn IMF package has been delayed since November, with nearly 100 days gone since the last staff-level mission to Pakistan. Sources say that the IMF has asked Pakistan to arrange $8.4 billion in fresh loans aimed at ensuring debt repayments for the May-December 2023 period.
The IMF has asked Pakistan to arrange $6 billion in external financing till June 2023 to avoid default. Due to a delay in arranging these funds, the 9th programme review worth $1.2 billion remains incomplete.
On Thursday last, Finance Minister Ishaq Dar said that Pakistan will not make tough decisions on the demand of the International Monetary Fund (IMF) anymore.
While informally talking to the journalists, Ishaq Dar said that it is completely up to the International Monetary Fund (IMF) to sign a staff-level agreement or not.
He clarified that the government will not make tough decisions on IMF’s demand anymore. “We have already implemented pre-conditions of the IMF but not anymore.”
In a scheduled press conference on Thursday, IMF spokesperson Julie Kozack, said Pakistan needed “significant additional financing” to successfully complete the ninth review. She said the economy was facing stagflation, had very large financing needs and had also been affected by a series of shocks, including severe flooding.
It is pertinent to mention here that the United Arab Emirates, Saudi Arabia and China came to Pakistan’s assistance in March and April with pledges that would cover some of the funding deficit.