IMF to keep eye on policies implementation by Pakistan

The IMF mission chief stated on Friday that negotiations between the International Monetary Fund and Pakistan have concluded, with the latter assuring the Fund that it will implement policies necessary to ensure macroeconomic stability. An IMF mission led by Mr Nathan Porter visited Islamabad from January 31 to February 9 to hold discussions as part of the ninth review of the authorities’ programme supported by the IMF Extended Fund Facility (EFF) arrangement. Mr. Porter issued a statement yesterday at the end of the visit. According to him, “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. “Considerable progress was made during the mission on policy measures to address domestic and external imbalances. 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. The timely and decisive implementation of these policies along with resolute financial support from official partners are critical for Pakistan to successfully regain macroeconomic stability and advance its sustainable development. “Virtual discussions will continue in the coming days to finalize the implementation details of these policies.” The government said on Thursday it had agreed on a set of prior actions with the IMF to complete the ninth review of the troubled $7bn Extended Fund Facility (EFF). The IMF has asked for more time for negotiations with Pakistan over a deal that would unlock $1.1 billion in much-needed funds for the country, Secretary of Finance Hamed Sheikh said yesterday. “The staff-level agreement between Pakistan and IMF will be reached soon,” Sheikh, a senior official at the Ministry of Finance said. “The IMF mission asked for more time for staff-level negotiations.̶1; He said both sides had agreed on “actions and advance measures.” The staff-level talks were due to conclude on Thursday. However, he declined to say how many and what prior actions had been agreed upon, saying all these details would follow. Shaikh said that unfortunately, the finance minister would not be able to speak to the media because the Fund’s mission was of the view that there should be no discussion before the concluding statement is okayed by Washington. “They are waiting for it and we are also waiting. They are pursuing,” he said, adding that the government could only talk to journalists once the concluding statement is issued by the IMF. Responding to a question, he made it clear that the SLA would be reached subsequently and also confirmed that the draft Memorandum of Economic and Financial Policies (MEFP) had not yet been shared with Pakistan by the Fund mission. He stated that the government team insisted on the delegation issuing the customary end-of-mission statement and sharing the MEFP because everything had been resolved following extensive discussions. The MEFP is a critical document that outlines all of the conditions, steps, and policy measures upon which the two parties declare the staff-level agreement. Earlier on Thursday, Federal Finance Minister Ishaq Dar said that the final round of talks with the International Monetary Fund (IMF) was underway and that things were going well. The finance minister said there was no hitch in the talks and everything was going fine. “More talks are going to be held with the IMF today (Thursday). We will inform you very soon,” he told the reporters. The review’s completion would not only lead to a disbursement of $1.2bn from the IMF but also unlock inflows from friendly countries and other multilateral lenders that Pakistan needs to stave off default.