Pakistan’s desire to get an IMF bailout package approved by January 15 may not be fulfilled as the global monetary body wants Islamabad to adopt steeper measures to address the external sector imbalances before sending the cash-strapped country’s case to its Executive Board, according to a media report.
Pakistan is seeking USD 8 billion from the International Monetary Fund (IMF) to bail itself out from a severe balance-of-payments crisis that threatens to cripple the country’s economy. The Express Tribune quoting sources in the ministry of finance said that the two sides made their first contact on Thursday for the first time since November 20 when they concluded their first talks for the bailout package.
Finance Minister Asad Umar and the IMF’s Washington-based mission chief Harald Finger made contact through a video link, the report said. The two sides discussed the developments that took place during three weeks. Talks between Pakistan and the IMF remained inconclusive last month after both sides could not bridge the gulf on issues like the increase in electricity prices, hike in interest rate, rupee devaluation and tax collection targets.
At that time, Pakistani officials had claimed that the staff-level agreement could be reached before Christmas holidays and Pakistan could request the IMF to send its case to the next board meeting, tentatively scheduled for January 15. Both the sides showed flexibility and talks on Thursday were held in a more conducive environment than last month, said a senior official of the ministry.
The finance minister informed the IMF mission head about developments on exchange rate and monetary policy. The sources said that the IMF welcomed both the developments but urged Pakistan to continue these necessary actions to address the external sector imbalances. The IMF wanted further adjustments in the exchange rate and monetary policy, said the sources.
During the video conference link, the two sides also discussed the issue of the increase in the electricity prices that remain unimplemented. The IMF was demanding 22 per cent further increase in electricity prices to address the issue of the circular debt.