IMF seeks financial assurances before taking 'next step with Pakistan'

The International Monetary Fund (IMF) has said it needs to ensure financing assurances are in place in order to take “the next step with Pakistan”.

In a press briefing on Friday, Julie Kozack, the IMF’s Director of Strategic Communications, stated: “Timely financial assistance from external partners will be critical to support the authorities’ policy efforts and ensure the successful completion of the review [with Pakistan].

“Ensuring that there is sufficient financing to support the authorities is the paramount priority. A Staff Level Agreement (SLA) will follow once the few remaining points are closed,” she said.

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The IMF official said that financing assurances are a standard feature of all IMF program,es.

“We do need to ensure that we have those financing assurances in place in order for us to be able to take the next step with Pakistan,” she added.

On the status of talks with Pakistan, Kozack said discussions are ongoing between IMF staff and the Pakistani authorities toward a SLA on policies to complete the ninth review of Pakistan’s extended Fund Facility (EFF).

“The authorities are committed to implementing the necessary reforms. They’ve started to implement decisive actions to stabilize the economy and restore confidence. While providing space to accommodate the needs related to the floods, including through an increase in social assistance through the Benazir Income Support Program, which is aimed at the most vulnerable,” she said.

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The IMF spokesperson also said that Pakistan’s economy faces multiple challenges including from slowing growth, high inflation and large financing needs. “And of course, this is all coming on the back of devastating floods,” she said.

The statement comes as Pakistan reels from one of its worst economic crises in history. The South Asian country has been faced with a barrage of woes with a perceived default risk and downgrade by international ratings agencies reflecting the state of the economy that has also had to bear major political turmoil and frequent change in key leadership.

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Pakistan remains in talks with the international lender for the resumption of the IMF’s Extended Fund Facility (EFF), which has been stalled since last year.

The bailout programme’s revival has been deemed crucial to stabilise the economy that has been hit by a severe dollar shortage in recent months with reserves held by the central bank treading at critically low levels.

On Thursday, the IMF clarified that decisions regarding the constitutionality, feasibility and timing of provincial and general elections “rest solely with Pakistan’s institutions”, it added that there was “no requirement under Pakistan’s Extended Fund Facility-supported programme which could interfere with the country’s ability to undertake constitutional activities”.