Pakistan is set to resume talks for the revival of the $6bn programme with the IMF that was suspended by the government earlier this year. However, the global financial institution has not shown willingness to hold any direct meetings with the economic team so far.
Finance Minister Shaukat Tarin, who could be an adviser soon, is expected to visit Washington on Oct 15 to meet with IMF and World Bank officials during their annual meetings. However, the schedule has not yet been finalized with just days left before the policy level talks. The IMF instead wants to hold a virtual meeting to revive the financial programme.
The snub could be seen as an indication of a rift between the government and the financial institution. Pakistan and the IMF had signed the $6bn deal in July 2019 but the programme was derailed in January 2020. It was restored briefly in March this year before again going off track in June. There have been no serious discussions ever since. The next two weeks will decide whether Pakistan wants to exit the programme as scheduled in Sept 2022 or needs an extension to receive the remaining funds.
Tarin said that government was committed to the IMF programme and hoped to successfully complete the upcoming review. Pakistan wants IMF to ease the tough loan conditions. Ever since Tarin became finance minister, he has said the targets attached to the loan to raise taxes and rein in government spending are tough. He also resisted moves to raise energy tariffs and was on a collision course with the IMF before the situation normalised.
The programme was suspended amid the coronavirus pandemic when Pakistan shut down businesses and the economy faced a battering. The situation has changed now but the economic indicators haven’t improved and Pakistan needs funds. If the upcoming talks with the IMF are successful, Pakistan could receive $1bn in funds which could improve financial liquidity. The GDP is forecast to grow 4 percent in the fiscal year as business activity has resumed. It is imperative that policies are taken which improve the economic situation the country.
