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Friday, July 19, 2024  
13 Muharram 1446  

Pakistan finance secretary sees IMF staff level talks wrapping up this week

The mission was recently in Pakistan but left without a conclusion.
File photo.
File photo.

Pakistan expects to conclude talks with the International Monetary Fund over a staff level agreement as soon as this week, the country’s finance secretary said, in a crucial step towards unlocking funds to battle an economic crisis.

An IMF mission spent more than a week in Islamabad earlier this month to discuss a policy framework to allow the release of more than $1 billion in funding from a stalled $6.5 billion bailout package, originally approved in 2019.

However, the mission left without a conclusion.

“The consultations with the IMF are in the final stages. We expect to conclude the consultations soon, even within the week,” Hamed Yaqoob Sheikh, the top official in the finance ministry, told Reuters.

Commerce Minister Syed Naveed Qamar told Reuters during a visit to Washington that IMF approval was “almost there” after two remaining issues involving the country’s power sector had been resolved. He said his government was ready to implement required reforms.

Qamar said the IMF program would allow Pakistan to slowly nurse its economy back to health after the devastation of last year’s flooding, adding his belief that the world community should help Pakistan cope with the impact of climate change.

“I hope the world also realizes that a collapse of Pakistan’s economy would be a global phenomenon,” he said. “It’s not just a local issue for the Pakistani population.”

The IMF’s local representative didn’t respond to a Reuters request for a comment. The staff level agreement would need approval from the IMF’s board before the funds can be released.

The financing package has been held up since late last year over policy issues, with the IMF requesting a series of fiscal adjustments, including the removal of subsidies, jacking up fuel prices and raising more taxes to bridge a revenue shortfall.

Pakistan has taken steps, such as raising more than 170 billion Pakistani rupees ($648 million) through a supplementary finance bill passed by the parliament on Monday.

Other measures that still need to be taken to finalise the agreement include raising interest rates, which already stand at 17%, as well as obtaining commitments for more bilateral and multilateral funding, officials say.

The IMF funds are critical for the $350 billion South Asian economy, which is facing a severe balance of payments crisis.

The fiscal adjustments demanded by the deal, however, are likely to fuel record high inflation, which hit 27.5% year-on-year in January, analysts say.

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Finance Ministry