Karachi: International Monetary Fund (IMF)’s resident representative warned that Pakistan faces daunting task of providing credible assurances that its balance of payment deficit was financed for remainder of multilateral lender’s loan programme term.

External financing is one of last in string of prior actions  lender wants Islamabad to complete before it clears funding stalled since late last year, Esther Perez Ruiz told Reuters in an e-mailed response. Pakistan hopes to sign staff-level agreement with IMF after over month of negotiations to settle policy framework issues aimed at curtailing fiscal deficit ahead of annual budget around June. “All IMF programme reviews require firm and credible assurances that there is sufficient financing to ensure that borrowing member’s balance of payments is fully financed over remainder of programme. Pakistan is no exception,” IMF’s Ruiz said.

Finance Minister Ishaq Dar said last week that external financing assurance was not one of IMF’s conditions for clearance of funding. Ruiz said that difference in foreign exchange rates between open and informal markets has been very damaging for Pakistan, resulting in shortages of foreign exchange and consequently imported goods. Ruiz added permanent power surcharge on consumers was also among measures planned by Pakistani authorities to address energy sector debt. Ruiz added that preventing further CD arrears was vital to ensure viability of energy sector and enhance energy provision.  Meanwhile, Pakistan is seeking confirmation from Saudi Arabia to secure additional deposits of $ 2 billion and $ 950 million loan from World Bank and Asian Infrastructure Investment Bank for signing of Staff-Level Agreement with International Monetary Fund within coming week.

Published in The Daily National Courier, March, 07 2023

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