IMF remains engaged with Pakistan on bailout programme: report

The International Monetary (IMF) remains engaged with Pakistan on securing funding and policy assurances with the goal of reaching an agreement on the ninth review of the $6.7 billion loan agreed in 2019, a spokesperson for the Washington-based lender said, reported Bloomberg on Thursday.

The remarks come after violent clashes between supporters of former prime minister Imran Khan and police broke out across the country after Pakistan’s anti-corruption agency arrested the former prime minister on Tuesday.

Pakistan’s deepening political turmoil douses hopes for IMF relief

The latest rupture in Pakistan’s feverish politics comes as the 230-million-population nation prepares to hold tightly-fought elections in the autumn while facing its worst economic crisis in decades, with dwindling reserves and a stalled IMF bailout programme that is expiring in June and scarce other financing sources in sight.

Various measures including a floating exchange rate, additional taxes, and hike in energy tariffs have failed to convince the IMF to resume the bailout.

In its report on Thursday, Bloomberg said the IMF declined to comment on arrest of Imran Khan, but added that the IMF sees no indication that Pakistan wants to pause negotiations on disbursement from the current programme.

“Pakistan authorities have committed not to introduce fuel cross-subsidy scheme in F23 and beyond,” added the IMF, referring to the fuel package announced by Prime Minister Shehbaz Sharif that has not yet taken a final shape.

The IMF’s Pakistan representative did not immediately respond to a request for comment by Business Recorder.

The IMF bailout is widely seen as crucial for the South-Asian country that also faces the risk of default unless it receives massive support.

Earlier, Moody’s Investors Service warned that Pakistan could default without an IMF bailout as the country faces uncertain financing options beyond June.

“We consider that Pakistan will meet its external payments for the remainder of this fiscal year ending in June,” Grace Lim, a sovereign analyst with the ratings company in Singapore, was quoted as saying.

“However, Pakistan’s financing options beyond June are highly uncertain. Without an IMF programme, Pakistan could default given its very weak reserves.”

Meanwhile, the IMF Executive Board has issued meetings scheduled till May 17, but Pakistan is not on the agenda, reported Business Recorder on Tuesday.

According to the IMF Executive Board calendar available on its website, next meetings are scheduled for May 11, 15, and then again on May 17, 2023; however, Pakistan is not on the agenda though it could be added in the event that the ninth review is declared a success.