ISLAMABAD: The International Monetary Fund (IMF) is ready to support the new government Pakistan in its efforts to make the country’s economy sustainable.
IMF’s Resident Chief in Pakistan Esther Perez Ruiz said: “The IMF congratulates Shehbaz Sharif on becoming the prime minister and looks forward to working with his government and discussing policies that would support inclusive and sustainable growth.
On Thursday, Prime Minister Shehbaz Sharif also gave a go-ahead signal to his economic team to renegotiate IMF loan programme.
Meanwhile, IMF Resident Chief Ruiz said this while commenting on the possibility of holding parleys with Pakistani authorities for accomplishing the 7th Review under the $6 billion Extended Fund Facility (EFF). However, the IMF’s office did not give any specific date or time frame for the meetings to end deadlock for fresh talks, The News reported today.
Pakistan requires massive dollar injections on an immediate basis in order to avert a balance of payment crisis as the foreign currency reserves held by the State Bank of Pakistan (SBP) further dropped to $10.8 billion as of April 8, 2022. China has not yet rolled over its commercial loans of $2.5 billion.
China has agreed to roll over this commercial loan and Chinese officials are working out the technical details as a consortium of three banks was involved in it. The Chinese side is awaiting the visit of newly elected PM Shehbaz Sharif or a formal request from him.
At present, revival of the IMF programme is not an easy task mainly because there have been massive slippages in internal and external accounts of the economy and the new government will not be in a position to take tough decisions like hiking fuel and electricity prices as well as additional taxation measures for resumption of the stalled IMF programme.
The yawning budget and current account deficits will further make it impossible to win any lenient attitude from the IMF. The budget deficit stood at Rs2,504 billion or 3.9% of GDP for the first nine months of this fiscal in accordance with provisional estimates, while the Ministry of Finance has projected it to escalate to Rs5,500 billion by June 30, 2022.
Pakistan is left with no other option than to seek more multi-billion-dollar deposits from friendly countries such as China, and Saudi Arabia and commercial loans from a consortium of banks to shore up its dwindling foreign currency reserves.
According to the SBP data released on Thursday, Pakistan’s total liquid foreign reserves stood at $17,028 billion as of April 8, 2022. The break-up of the foreign reserves shows the foreign reserves held by the central bank were $10,84 billion and net foreign reserves held by commercial banks were $6,178 billion. During the week ended on April 8, the SBP reserves decreased by $470 million to $10.84 billion, mainly due to external debt repayments.