- The delay in talks between Pakistan and the IMF rattled the financial markets.
- The IMF’s resident chief says not all quantitative targets have been met by the end of September.
- Pakistani officials are still optimistic that the ninth review will be completed soon.
ISLAMABAD: Negotiations between Pakistan and America are ongoing. International Monetary Fund (IMF) is at an impasse with international creditors pressing Islamabad for the policies and reforms needed to keep the bailout program targets on track and complete the pending ninth review. News.
An important objective of program evaluations in Pakistan, as in all program countries, is to assess program performance, as well as, with respect to the future, whether the program is on track or policy to meet program goals. Actions are needed, advancing reform goals, and maintaining macroeconomic stability going forward,” said Esther Perez Ruiz, IMF Resident Chief in Pakistan, in a written response.
The IMF’s review for the release of the next tranche under the bailout funding has been pending since September. However, the finance minister Ishaq Dar Last week, it claimed that Pakistan had met all the targets of the review.
However, the IMF resident chief said that discussions with the Pakistani authorities are ongoing in these areas, particularly as not all quantitative targets have been met by the end of September.
“There have been significant new developments since the last program review, including unusual flooding and a number of new initiatives and developments, which affect this year’s economic outlook,” added Ruiz.
Sources familiar with the discussions told the publication that the global lender has told the finance ministry it needs to meet all end-quarter performance benchmarks and targets.
“Both parties will also need broader agreement on future data based on which performance targets and indicator targets will be set for the remainder of the program period up to June 2023,” he added.
After the devastating floods, the IMF and Pakistan revised the entire macroeconomic and financial framework so that both sides could agree on it.
A broader agreement on a revised macroeconomic framework could pave the way for consensus building on a staff-level agreement to complete the 9th review under the $7 billion Extended Fund Facility (EFF).
With the revised figure for nominal growth in the 25 percent range, the tax-to-GDP ratio will come down if the FBR achieves its annual target of Rs 7.47 trillion for the current fiscal. Without agreement on revised figures, it will be difficult to reach an agreement between the two parties.
Pakistani officials remain hopeful that the 9th review will be completed soon, paving the way for the release of the next tranche of nearly $1 billion for Pakistan’s struggling economy.
Amid dwindling foreign exchange reserves that hit $7.5 billion, Pakistan needs an injection of dollar inflows to gain breathing space.
The prospect of more deposits from the friendly country will put the authorities in a better position to negotiate a better deal with the IMF, but if no deposits are made in the next two weeks, foreign exchange reserves could dwindle further in the coming weeks.
Stocks crashed.
Meanwhile, the stock market reacted negatively on Monday and fell sharply due to the delay in the IMF review.
The benchmark KSE-100 shares index of the Pakistan Stock Exchange (PSX) fell 537.43 points (1.28%) to close at 41,612 points after hitting an intraday low of 635 points.
After a slightly positive start, the market succumbed to massive profit-taking, Topline Securities said in its daily market report.
“The sell-off jitters can be attributed to investor jitters over the hold-up in the IMF’s ninth review and the subsequent approval of a $1.2 billion loan tranche,” the brokerage said.