Islamabad: On Saturday, Finance Minister Ishaq Dar said Pakistan was waiting for a $1 billion loan from a friendly country to meet an IMF condition while the government avoids sovereign default through currency flow management.
Dar addressed the country on the US trip cancellation.
The “constitutional crisis” in the country forced the minister to cancel his trip to Washington for the World Bank-IMF spring meetings.
“On the prime minister’s instructions, I have cancelled the US visit but will virtually attend the meetings where Pakistan is needed,” he said. He called mandatory WB-IMF meetings “routine rituals” with extended speeches.
Miss Antoinette Sayeh, Jihad Azhor, and Nathan Porter set to meet Dar. The government failed to meet with the IMF managing director.
The finance minister said Pakistan had completed the ninth review despite the IMF staff level agreement delay.
At the seventh and eighth reviews, Saudi Arabia and the UAE wrote to the IMF about lending Pakistan $3 billion.
“This caused the two-month delay from mid-February,” he stated. Saudi Arabia confirmed the $2 billion loan to the IMF two weeks ago.
The finance minister remarked, “We are waiting for the confirmation of $1 billion loan from one friendly country” (the UAE). He stated that would help satisfy all the earlier activities for the staff level agreement and take two weeks to convey the case to the IMF board.
Pakistan and the IMF agreed to overcome a $6 billion external financing gap using bilateral, commercial, and programme loans. Despite Saudi Arabia’s commitment, a $4 billion deficit remains.
Official Reserves
Even after a $1.7 billion Chinese injection, overall official reserves fell to $4.2 billion. By limiting foreign currency outflows to exports, remittances, and some loans, the government is avoiding default.
Yet, this is causing a significant payout backlog. As well as shortage of vital imported commodities and raw materials that cost billions to fix.
Dar added the country did not delay its $11 billion worldwide sovereign payments during the worst of the liquidity crisis.
Dar also confirmed that the IMF had questioned the government’s petrol subsidy, stating he had all the answers. The minister said the subsidy charged the wealthy more and gave that money to the poor as relief. He added that it had nothing to do with the budget.
IMF Resident Representative Miss Esther Perez told that the IMF would promote targeted subsidies and requested more information from Pakistan “in terms of its operation, cost, targeting, protections against fraud and abuse and any offsetting measures”.
Dar again accused the IMF for delaying programme review negotiations. “When I went to the IMF with my delegation in October 2022, I invited them to Pakistan for the ninth review—technically the September 2022 review—and for unknown reasons, they finally came to Pakistan in January 2023.”
