Pakistan strives to fulfil IMF conditions for loan programme
Pakistan’s Prime Minister Shehbaz Sharif announced on Tuesday that his government is actively working to implement the conditions set forth by the International Monetary Fund (IMF) to complete the country’s loan programme.
Sharif expressed hope that this would be Pakistan’s final IMF programme. On July 12, Pakistan signed a staff-level agreement with the IMF for a new $7 billion program spanning 37 months.
However, the programme’s approval by the IMF’s executive board remains pending, contingent upon confirmation of financing assurances from development and bilateral partners.
Sharif emphasised that Pakistan is committed to fulfilling all the IMF’s conditionalities. He stated that upon board approval, the country would enter a “new phase” and anticipated this to be the last IMF programme it would need to undertake.
Local media reports suggest that Pakistan’s IMF approval has been delayed due to a lack of additional financing and unpaid energy sector subsidies announced by Punjab and the federal government.
Punjab Information Minister Azma Bukhari stated that the federal government and the IMF had not reached out to the province regarding the electricity subsidy. She emphasised that no official statement had been issued by the Fund.
The IMF as well as Pakistan’s Ministries of Finance and Power did not immediately respond to requests for comment. Reining in unresolved debt within Pakistan’s power sector remains a key concern for the IMF.
The poor and middle classes in Pakistan are still grappling with the effects of a $3 billion IMF bailout completed in April, which included 12 months of power tariff hikes.
These higher tariffs have led to a decline in household power consumption, with annual power use expected to fall for the first time in 16 years.
In August, Finance Minister Muhammad Aurangzeb informed Reuters that Pakistan was making significant progress with the IMF to obtain Board approval in September.
The central bank chief stated that Pakistan is close to securing $2 billion in external financing, a requirement for IMF approval.
Moody’s recently upgraded Pakistan’s rating to Caa2, citing improved certainty on external financing following the IMF staff-level agreement. Moody’s anticipates IMF Board approval in the coming weeks.
Attribution: Reuters
Subediting: Y.Yasser
