IMF Team Leaves Pakistan Without Signing Deal

By Staff, Agencies

As Pakistan's foreign reserves plummet to an alarming level of below $3 billion, the country's leadership will continue to hold more virtual discussions with the International Monetary Fund [IMF].

"Virtual discussions will continue in the coming days," IMF Pakistan Mission Chief Nathan Porter said in a statement. However, a report by Reuters said the 10-day-long talks did not result in a "board discussion", a meeting that would have resulted in the release of the funds.

The talks with the IMF also ended without signing the Staff-Level Agreement [SLA] due to Pakistan's alleged failure in implementing IMF's prior requirements. Only after reaching the staff-level agreement, can it go for the board meeting at IMF's head office in Washington.

"Considerable progress was made during the mission on policy measures to address domestic and external imbalances. Virtual discussions will continue in the coming days to finalize the implementation details of these policies," the IMF statement added.

Pakistan's Finance Minister Ishaq Dar, however, later clarified that the country has agreed to IMF's conditionalities. He said that the payout was delayed due to "routine procedures." 

"The prime minister has said we're committed," Dar said. "We will implement whatever has been agreed upon between our teams. We will try to make sure Pakistan completes its second IMF program in its history," he added.

The payment, part of a $6.5 billion bailout Pakistan signed in 2019, has been stalled since last December and the tranche is necessary to prevent Pakistan from defaulting on external payment obligations.

Dar said the IMF mission had shared a draft Memorandum of Economic and Financial Policies [MEFP] with Pakistan. The MEFP is a key document that describes all the conditions, steps and policy measures based on which the two sides declare the staff-level agreement, reported Dawn.

"Once the MEFP has been finalized, they [IMF] have their internal process and then a Board meeting is held. And then finally, when approval is given, the [tranche] is disbursed.

“It is a standard process which can neither be shortened and hopefully they won’t extend it unnecessarily," Dar added.

Meanwhile, the State Bank of Pakistan [SBP] said in its latest weekly update that the country's foreign exchange reserves decreased by $2.92 billion due to external debt repayments in the week ending February 3, 2023, thereby increasing the risk of default on the repayment of foreign debt.