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ISLAMABAD: Pakistan said on Thursday it would strike a staff-level agreement (SLA) with the IMF next week as negotiations with the global lender about the release of $1.2 billion tranche were about to conclude. The statement, issued by finance minister Ishaq Dar, came after the value of the local currency dropped to an all-time low of Rs 285.09 against the US dollar, tumbling by Rs 19, a decline of about 7%, as trading closed on Thursday. Experts blamed the stalled IMF deal for the declining economy.
Pakistan has been negotiating with the IMF and is hoping to sign the SLA, which will pave the way for more inflows from other multilateral lenders and friendly countries.
In a series of tweets, the finance minister rubbished rumours regarding Pakistan defaulting. “Anti-Pakistan elements are spreading malicious rumours that Pakistan may default. This is not only completely false but also belies the facts,” he said. Dar said the State Bank of Pakistan’s (SBP) forex reserves had been increasing and were almost near $1 billion, “higher than four weeks ago despite making all external due payments on time”. “Foreign commercial banks have started extending facilities to Pakistan. Our negotiations with IMF are about to conclude and we expect to sign a staff-level agreement with IMF by next week. All economic indicators are slowly moving in the right direction,” he added.
Pakistan has already taken most of the prior actions demanded by the global lender, including a hike in fuel and energy tariffs, withdrawal of subsidies, generation of more revenues through new taxation in a supplementary budget, and adopting a market-based exchange rate.
The prerequisites by the lender are aimed at ensuring Pakistan shrinks its fiscal deficit ahead of its annual budget around June. Senior officials were reported by local media a day earlier as saying that the government was finding it increasingly difficult to convince the IMF to release a loan instalment.
The four items on the unfinished IMF loan programme agenda included an early hike in the central bank’s interest rate to represent general inflation, exchange rate movement to cater for outflow to war-ravaged and sanction-hit Afghanistan, written assurances for external financing gap from friendly nations, and the continuation of the Rs 3.39 per unit financing cost surcharge on electricity consumers for coming years through the finance bill, rather than for the four months already announced by the government.
Pakistan has been negotiating with the IMF and is hoping to sign the SLA, which will pave the way for more inflows from other multilateral lenders and friendly countries.
In a series of tweets, the finance minister rubbished rumours regarding Pakistan defaulting. “Anti-Pakistan elements are spreading malicious rumours that Pakistan may default. This is not only completely false but also belies the facts,” he said. Dar said the State Bank of Pakistan’s (SBP) forex reserves had been increasing and were almost near $1 billion, “higher than four weeks ago despite making all external due payments on time”. “Foreign commercial banks have started extending facilities to Pakistan. Our negotiations with IMF are about to conclude and we expect to sign a staff-level agreement with IMF by next week. All economic indicators are slowly moving in the right direction,” he added.
Pakistan has already taken most of the prior actions demanded by the global lender, including a hike in fuel and energy tariffs, withdrawal of subsidies, generation of more revenues through new taxation in a supplementary budget, and adopting a market-based exchange rate.
The prerequisites by the lender are aimed at ensuring Pakistan shrinks its fiscal deficit ahead of its annual budget around June. Senior officials were reported by local media a day earlier as saying that the government was finding it increasingly difficult to convince the IMF to release a loan instalment.
The four items on the unfinished IMF loan programme agenda included an early hike in the central bank’s interest rate to represent general inflation, exchange rate movement to cater for outflow to war-ravaged and sanction-hit Afghanistan, written assurances for external financing gap from friendly nations, and the continuation of the Rs 3.39 per unit financing cost surcharge on electricity consumers for coming years through the finance bill, rather than for the four months already announced by the government.
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