Pakistan and IMF say significant progress has been made in $6bn bailout talks


The Pakistani economy is on the verge of a financial crisis. (Case)


Significant progress has been made in talks on reviving Pakistan’s International Monetary Fund bailout program, the two sides said on Wednesday, with Islamabad expecting the lender to increase the size and tenor of the facility by 6 billion over 39 months.

The statements come as Pakistan’s economy is on the brink of a financial crisis, with foreign exchange reserves rapidly depleting and the Pakistani rupee at record highs against the US dollar amid uncertainty surrounding the program of the IMF.

“Discussions between IMF staff and the authorities on policies to strengthen macroeconomic stability over the coming year continue, and significant progress has been made on the FY23 budget,” said to Reuters Esther Perez Ruiz, resident representative of the IMF in Islamabad.

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Pakistan this month unveiled a 9.5 trillion rupee ($47 billion) budget for 2022-23 aimed at tough fiscal consolidation in a bid to convince the IMF to restart much-needed bailout payments.

However, the lender later said further steps were needed to align Pakistan’s budget with key IMF program objectives.

The two sides met on Tuesday evening and agreed on the budget and fiscal measures, but have yet to agree on a set of monetary targets, Finance Minister Miftah Ismail said.

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He expected no “hiccups” in the remaining talks and was waiting for an initial memorandum on macroeconomic and financial targets and then a formal agreement.

Details of the deal were not immediately available to Reuters.

“I also expect the duration of the program to be extended for another year and the amount of the loan to be increased,” he told Reuters, adding that the IMF had not yet committed to this. , but based on the talks, he expected him to come through.

Pakistan had requested an increase in the size and duration of the program when Ismail met IMF officials in Washington in April.

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Pakistan entered the IMF program in 2019, but only half of the funds have been disbursed so far as Islamabad struggles to keep its targets on track.

The last installment was in February and the next installment was due to follow a review in March, but ousted Prime Minister Imran Khan’s government introduced costly caps on fuel prices that derailed budget targets and the programme.

Pakistan’s new government has removed price caps, with fuel prices soaring at the pump by up to 70% in the space of three weeks.

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