IMF and Pakistan to resume talks next week for crucial $1.1 billion deal
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Karachi: After ten days of face-to-face discussions in Islamabad, the IMF and Pakistan have not decided on the crucial $1.1 billion funding. Both parties are set to resume the talks next week on how to keep the country afloat.
Pakistan IMF Mission Chief Nathan Porter in an official statement confirmed that talks were continuing and considerable progress had been made.
Finance Minister Ishaq Dar said Pakistan had agreed with the IMF on the conditions to release the funds, which have been delayed since last December. He added that "routine procedures" are the reason behind the delay and the talks will resume virtually on Monday. "We will implement whatever has been agreed upon between our teams," reported Reuters.
As per IMF's demands, the Pak government has also agreed to introduce fiscal measures including new taxes. Some experts think fiscal tightening can tip the economy into further crisis.
Prime Minister Shahbaz Sharif last week said the country's economic situation is "unimaginable". Khaqan Najeeb, a former finance ministry adviser, said Pakistan should have reached a staff-level agreement at the end of the IMF mission and "delay is untenable".
Analysts told Reuters that Pakistan only has enough foreign reserves to cover less than three weeks of crucial imports. "The longer it takes for the IMF tranche to be paid out, the higher the risk of default, especially with elections also looming." Former central bank Deputy Governor Murtaza Syed thinks Pakistan needs a payout as soon as possible. "If this drags on for, say, longer than a month, things get more difficult as our forex reserves have reached a critical level."
Pakistan is struggling with an economic crisis. The $350 billion economy has not yet recovered from the devastating floods of 2022. The government thinks the rebuilding efforts will cost $16 billion.
The government has approached the International Monetary Fund for at least $1.1 billion of stalled funding as part of a $6.5 billion bailout signed in 2019. The delay in the deal has sent the price of Pakistan's government bonds to fall.