Minister of State for Finance, Aisha Ghaus Pasha said IMF is surprised at the speedy implementation of agreements that help holding the loan program. She stated the lender has shown its satisfaction with the measure taken by the government to generate additional revenue of RS170 billion through a supplementary finance bill listed in the parliament by finance minister Ishaq Dar on Wednesday. The Govt. of Pakistan could not deal with IMF last week and the delegation departed from Islamabad 10 days after the talks. The discussion is still on the talks that Pakistan needs funds to run else the economy would make the country default.
As agreed on the ninth review of the program, it would release over $1.1 billion of the total $2.5 billion pending as part of the current package agreed upon in 2019 which ends on June 30. The funds are deciding the economy’s current foreign exchange reserves barely cover three weeks’ worth of imports.
Both sides are holding virtual talks with the financial markets responding positively to the developments. Pasha further explained that Washington-based moneylenders are engaging with Pakistan’s friendly countries including Saudi Arabia, the United Arab Emirates, and China, concerning the external financing needs of the county.
Minister said the external collection is on discussion for the funds. The policy-level agreement reached with the IMF mission before they left the country. However, in some languages, the government is looking for details. During the virtual meeting on Thursday night, both sides almost evolved a consensus on the macroeconomic framework for the current fiscal year.
IMF is expecting to have a staff-level agreement next week with the State bank of Pakistan, scheduled to engage with the fund’s mission. The real interest rate should drag from negative to positive IMF requirements. SBP will have to hike the discount rate at least by 200 basis points.
The government is trying to look for a real gross domestic product rate target of 1.5 to 2% while CPI-based inflation is at 29% without taking into account fiscal and energy sector adjustments. These all measures undertaken at the suggestion of the IMF.
Ministers are hoping to sign a deal with IMF next week. Generating domestic bills, last two failed to get desire results mainly because markets are expecting upward improvement modification in policy rates.
