IMF has informally agreed to ease programme conditions: Miftah

Finance Minister Miftah Ismail said on Friday that International Monetary Fund (IMF) Managing Director Kristalina Georgieva has “expressed agreement” with Pakistan’s request to ease the conditions imposed on the country under the Extended Fund Facility (EEF) programme.

Speaking to Geo News, Ismail said the IMF official had also agreed to increase the amount Pakistan would receive in the next tranche. He added, however, that a “lot of negotiations” were yet to be held with the international lender.

Separately, while speaking to Dunya News, the finance minister said he had informed the IMF of Pakistan’s changed economic situation after the floods, the destruction of cotton crops and the difficulties the country would face in ensuring adequate wheat supplies.

“They (IMF officials) understood our point and almost said yes but formal discussions will happen in two weeks when I go to Washington. The conditions will be relaxed keeping in view the situation and the amount of the tranche will also be increased,” he said.

Ismail said he also held meetings with World Bank officials, adding that the country would receive $2 billion from it this year.

“If Sindh’s entire cotton [crop] is destroyed after the floods, then we will have to import cotton crop. Similarly, if we cannot sow wheat at the right time, then the wheat [output] will be reduced. Should we let our people die? We will have to import that as well,” he said.

He said he had met billionaire philanthropist Bill Gates to “discuss milk and other things”, while Prime Minister Shehbaz Sharif spoke to Saudi Crown Prince Mohammad bin Salman about food for children.

When questioned about the rupee’s sharp decline against the dollar, Ismail said the government was not in a position to intervene in the market due to the IMF’s conditions and a shortage of dollars.

“Dollar is strengthening against all currencies. Pakistan’s perception of default has increased [but] we will absolutely not default. This is why the dollar has risen but it will come under control in the coming days,” he emphasised.

The IMF’s Executive Board had completed the combined 7th and 8th revi­ews of a loan facility for Pak­is­tan last month, allowing immediate disbursement of $1.1bn to the country.

The executive board had also approved Pakistani authorities’ request for waivers of nonobservance of performance criteria.

“The immediate priority is to continue the steadfast implementation of the rece­ntly approved budget for FY23, adherence to a market-determined exchange rate, and pursuit of a proactive and prudent monetary policy,” said a statement issued by the IMF headquarters in Washington at the time.

“It is also important to continue to expand social safety to protect the most vulnerable and accelerate structural reforms including to improve the performance of state-owned enterprises and governance,” the statement added.

This EFF arrangement — signed in July 2019 — was to provide $6bn to Pakistan during a 39-month period. Last month, the IMF board approved an extension of the programme until end-June 2023.