IMF reiterates ‘necessary financing’ condition for completion of Pakistan’s ninth review

The International Monetary Fund (IMF) reiterated that it is working with Pakistani authorities to bring the pending ninth review to conclusion “once the necessary financing is in place and the agreement is finalised”.

“In addition, the IMF supports the authorities in the implementation of policies in the period ahead, including in the technical work to prepare the FY24 budget, which is to be passed by the National Assembly before end-June,” Nathan Porter, the IMF Mission Chief for Pakistan, was quoted as saying in a statement to Business Recorder on Friday.

The development comes as Pakistan remains engaged with the Washington-based lender to resume its bailout programme that has been stalled at the ninth review since November last year.

As part of prior conditions to resume funding, Pakistan was required to undertake a series of steps including new taxation measures, free-floating exchange rate, and hike in energy tariffs.

It was also required to ensure that its balance of payments’ gap was fully financed for the remainder of the IMF programme that ends in June. While Pakistan managed to secure $3 billion in additional funding – including $2 billion from Saudi Arabia and another $1 billion from the UAE – the IMF said after the commitments back then that it was looking forward to obtaining the necessary financing assurances as soon as possible to pave the way for the successful completion of the 9th Extended Fund Facility (EFF) review.

The statement implied that there was still some way to go before Pakistan’s balance of payments’ gap was fully financed.

Additionally, on Friday, it was reported that Pakistan is required to make debt payments of $3.7 billion in May and June, according to Fitch Ratings, which would cause further pressure on an already depleted level of foreign exchange reserves.

Pakistan’s policymakers have derived some hope from a current account surplus in March, which brings down the gap in financing, but securing fresh funding commitments – even after China’s rollover and another refinanced loan of $1.3 billion – remains the next hurdle.