IMF gives new economic and financial targets to Pakistan in a step toward restoring the bailout package
Pakistan’s coalition government is hopeful to receive $2 billion from the International Monetary Fund (IMF) amid a balance of payment crisis due to the sharp rise in global oil and commodity prices.
Prime Minister Shehbaz Sharif, while addressing the ‘Turnaround Pakistan’ conference organized by the Ministry of Planning and Development on Tuesday, said Finance Minister Miftah Ismail has informed him that IMF could give Pakistan $2 billion in lieu of a bailout package.
“Miftah Ismail relayed a message in the morning saying that we will hopefully be receiving not $1bn from the IMF, but $2bn. I replied by saying that our real goal is [achieving] self-reliance. Easier said than done,” said Shehbaz Sharif.
Shehbaz Sharif calls for self-reliance
The prime minister also stressed the need for all segments to work harder together to help the country progress as well as the need for self-reliance. It s only through self-reliance that you achieve political and economic independence, he added.
IMF gives new targets to unlock bailout package
Shehbaz Sharif’s comments came hours after the Finance Minister announced that the IMF has given the country new economic and financial targets. The targets are for the seventh and eighth reviews of the IMF bailout program. Once these targets are agreed upon and ratified, it would pave the way for unlocking the suspended bailout program.
IMF’s $6 billion program
Pakistan entered a $6 billion IMF program in 2019. The program was spread over a period of three years and three months. IMF suspended the program earlier this year after the previous Prime Minister Imran Khan announced unfunded subsidies for the oil and power sectors less than a month before his government was ousted in April.
To restore the suspended bailout, the coalition government took several harsh economic measures to get back in the IMF’s good graces, including
- Removing subsidies on oil and gas
- Raising tax
- Making adjustments in the fiscal 2022-23 budget, and
- Reducing the government’s fiscal deficit by slashing development fund
Pakistan’s Balance of Payments situation
Pakistan desperately needs the money to prevent a balance of payment crisis looming large on the country amid a sharp rise in global oil and commodity prices. State Bank of Pakistan’s foreign currency reserves have fallen to $8.2 billion, barely enough to cover six weeks of imports, and the economy is reeling from a sharp depreciation in the Pakistani rupee and double-digit inflation.
Once the IMF clears the next tranche, it should open up other external finance avenues for Pakistan to shore up its reserves.