Virtual discussion between IMF, Pakistan to continue

February 10, 2023 (MLN): Virtual discussions between the International Monetary Fund (IMF) and Pakistan will continue in the coming days to finalize the bailout package, the fund said in a statement issued today. 

“Considerable progress was made during the mission on policy measures to address domestic and external imbalances," the statement added.

Key priorities include strengthening the fiscal position with permanent revenue measures and reduction in untargeted subsidies, while scaling up social protection to help the most vulnerable and those affected by the floods; allowing the exchange rate to be market determined to gradually eliminate the foreign exchange shortage; and enhancing energy provision by preventing further accumulation of circular debt and ensuring the viability of the energy sector, it noted. 

The timely and decisive implementation of these policies along with resolute financial support from official partners is critical for Pakistan to successfully regain macroeconomic stability and advance its sustainable development, it emphasized.

An IMF mission led by Mr. Nathan Porter visited Islamabad from January 31 to February 09 to hold discussions under the ninth review of the authorities’ program supported by the IMF Extended Fund Facility (EFF) arrangement.

The IMF team welcomes the Prime Minister’s commitment to implement policies needed to safeguard macroeconomic stability and thanks the authorities for the constructive discussions.

It seems that cash-strapped Pakistan will have to wait a few more days to get a fresh breeze from the fund's side. 

At present, the foreign exchange reserves held by the State Bank of Pakistan (SBP) have reached nine years three-month low, standing at $2.92 billion, and fell by $170 million during the week ended on February 03, 2023. The outflow of $170mn is attributed to external debt payment.

Since the start of the calendar year 2023, the SBP Foreign reserves decreased by $2.6bn.

Moreover, the reserves held by the commercial bank decreased by $32.6mn to $5.62bn, and the total net reserves held by the country fell to $8.54bn.

It is important to note that the current level of foreign currency reserves is sufficient to cover only 0.60 months of import bills.

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