KARACHI: Pakistani authorities and International Monetary Fund (IMF) on Tuesday began technical round of talks for approximately $8 billion stabilization program the country seeks from the Fund to support its wobbling economy.
IMF team arrived in Islamabad on Monday to resume negotiations for a three-year bailout package which could help Pakistan overcome its economic crisis. The visit follows a meeting between Prime Minister Imran Khan and IMF Chief Christine Lagarde, on the sidelines of the Belt and Road Forum in Beijing on April 26.
The fund had decided to send its mission to Islamabad after Pakistani authorities and the IMF staff held “constructive discussions” during the IMF/World Bank Spring Meetings in Washington DC towards an IMF-supported program.
The deal, expected to be signed next month, would be a 13th such arrangement since 1980s and 22nd since the country became the member of the IMF.
The Ministry of Finance said in a statement on Tuesday that “extensive preparation for data and macro-economic framework finalization and structural reforms have been ongoing .
“Ministry of Finance held in-depth discussions with all key stakeholders including State Bank of Pakistan, Power and Gas Division, Privatization Commission, Federal Board of Revenue and Benazir Income Support Program among others," said Dr. Khaqan Hassan Najeeb, Advisor & Spokesperson for the Ministry of Finance.
The IMF team is expected to stay in Pakistan for a span of 10 days to hold in-depth review of the country’s economic situation. “Apparently, it seems that the fund team is conducting an in-depth reviewing and the more in-depth they go the likelier it is for them to come up with strong conditionalities that may include reducing current account deficit through more taxation measures or further rupee devaluation,” Muzzamil Aslam, senior economist, told Arab News.
“The things are going to go tougher as the time passes,” Aslam said. However, he opined that with the US delegation visiting Pakistan this week, the country may get political support from US which may soften the conditionalities in response to political cooperation between two countries.
A US delegation, led by Principal Deputy Assistant Secretary of State for South and Central Asian Affairs, Ambassador Alice Wells, met with Adviser to Prime Minister on Finance, Revenue and Economic Affairs, Dr. Abdul Hafeez Shaikh on Monday.
“The meeting underlined the need to deepen the engagements between the two countries in the area of trade, economy and energy,” a statement issued by the Finance Ministry said.
The IMF forecast shows that Pakistan’s economy will continue to weaken due to large macroeconomic imbalances and the ongoing policy adjustment challenges that may slow growth from 5.2 percent in 2018 to 2.9 percent in 2019.
The previous round of talks was held in November 2018, but remained inconclusive. Last year, Khan’s government was close to signing the deal with the Fund but decided against it after reviewing the conditions attached to the proposed program, which officials had deemed as stringent.
