Dar-Blome meeting seen as positive development

KARACHI: The financial sector saw Finance Minister Ishaq Dar’s meeting with US ambassador Donald Blome in Islamabad on Wednesday as a positive development while the currency markets indicated their satisfaction with a calm day for the exchange regime.

The meeting has revived hopes for a breakthrough in negotiations with the International Monetary Fund for the release of $1.2 billion tranche.

A statement issued by the Finance Division said Mr Blome expressed confidence in the policies and programmes of the government for economic sustainability and socioeconomic uplift of the masses.

Mr Dar told the US envoy that the budgetary measures for 2023-24 were aimed at reducing the fiscal gap in order to meet national and international obligations.

He informed the US diplomat about the progress on ongoing talks with the IMF and stated that the government is committed to completing the programme.

However, a statement by the finance division did not mention any US support for IMF deal, but the financial sector considered the meeting a move by the government to get help for concluding the IMF deal before June 30.

The government has been under serious criticism by the IMF over data for the budget FY24. The government is willing to catch the outgoing $2.2 billion of IMF loan before it expires on June 30.

Despite all possible efforts Pakistan has not been able to persuading the IMF into releasing the instalments and create space for next loan facility required for the coming years.

The finance ministry said it was committed to completing the IMF programme, stalled since November last year, and was keenly engaged with the lender “to reach an amicable solution”.

According to the finance ministry, the US ambassador extended his support to further promote bilateral economic, investment and trade relations between the two countries.

“The two sides also exchanged views about areas of common interest and how the existing bilateral relations can be enhanced further,” said the statement.

Pakistan has been asking friendly countries to use their influence for release of the IMF tranche and complete the extended facility of $6.7bn. Experts and independent economists, including former finance minister Miftah. Ismail, have been emphasising calling for a deal with IMF They believe Pakistan can’t survive and avoid default without IMF.

However, the meeting with the US Ambassador was considered a positive step towards a deal on the IMF programme. The US has greater influence and larger shares in the IMF than any other country.

Even tacit support from Washington could help Pakistan get loans stuck up from donor agencies.

The local currency markets, both open and inter-bank, expressed satisfaction without going for any major change in the rupee’s value. The open market was unchanged at 292 while the inter-bank raised the rupee by 24 paise against the US dollar.

“Hopes are still alive. The meeting with the US diplomat could produce positive results for Pakistan. The fear of default cost heavily not only to the PKR but the entire economy,” said Atif Ahmed, a currency expert and dealer in the inter-bank market.