IMF has stated that Pakistan must provide assurances regarding external financing to cover the balance of payment deficit. Esther Perez Ruiz, an IMF representative, explain on Monday that this is one of the last prerequisites that the lender requires from Islamabad before it releases funding that has stalled since late last year.
Govt aims to sign IMF deal to reduce fiscal deficit before June budget after a month of negotiations. Pakistan has completed almost all of the prior actions required, except for the external financing requirements.
IMF requested the external financing to clear $1.1 billion in disbursement under the $6.5bn Extended Fund Facility. Ruiz emphasized that “All IMF program reviews require firm and credible assurances that there is sufficient financing to ensure that the borrowing members’ balance of payment is fully financed over the remainder of the program. Pakistan is no exception.”
Finance Minister Ishaq Dar had previously stated that the external financing assurance was not one of the IMF conditions for clearance of funding. However, he acknowledged that Pakistan required $5bn of external financing for the balance of payment deficit in the fiscal year ending on June 30. The IMF believes that it should be $7bn.
Pakistan committed to aligning exchange rates. It is also committed to implement a permanent power surcharge to address energy sector debt, according to the IMF representative.
The IMF program scheduled to end in June. The organization requires credible assurances from Pakistan that there will be enough financing to cover the balance of payments deficit. Govt aims to secure a staff-level agreement with IMF to fulfill prior actions. It is including the external financing requirements, to ensure a smooth and successful agreement.
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