Pakistan had signed a 39-month, $6 billion Extended Fund Facility with the IMF in July 2019. It received disbursements of about $3bn but further tranches were stopped when an agreement could not be reached with the previous government. The lender had expressed concerns over the status of some of its objectives, including fiscal consolidation.
IMF’s resident representative on Monday said that additional measures will be needed to bring Pakistan’s budget for FY2022-23 in line with the key objectives of its IMF programme.
The next tranche that Pakistan is to receive upon a successful review is $900 million, and a green light from the IMF would also open up other global funding avenues.
Pakistan urgently needs funds in the face of dwindling foreign exchange reserves, which have reached $9.2 billion — enough for less than 45 days of imports.
Pakistan unveiled a Rs9.5 trillion budget for 2022-23 on Friday, aimed at tight fiscal consolidation in a bid to convince the IMF to restart the much-needed bailout payments.
“Our preliminary estimate is that additional measures will be needed to strengthen the budget and bring it in line with key program objectives,” Esther Perez Ruiz told Reuters.
Finance Minister Miftah Ismail told Reuters on Saturday that the IMF had expressed concerns about the budget numbers, including fuel subsidies, a widening current account deficit, and the need to raise more direct taxes.
He, however, added that his government was confident they could adjust the budget to bring the IMF on board and was hopeful of securing a successful review this month.
“Discussions with the authorities continue to obtain more clarity on certain revenue and spending items and allow for a full assessment,” Ruiz said.
She said the fund was ready to continue to support the authorities’ efforts and in the implementation of policies to promote macroeconomic stability.