IMF Demands Pakistan to Must Ensure the Elimination of the Balance of Payments Deficit

International Monetary Fund (IMF) representative Esther Perez Ruiz has said that Pakistan must ensure its balance of payments deficit is fully financed for the remainder of the IMF program.

Esther Perez Ruiz told the news agency “Reuters” that the external financing is the last link in the measures that the IMF has demanded from Pakistan to restore the loan program.

The Pakistan government is hopeful that after more than a month of talks with the IMF to resolve policy framework issues, a staff-level agreement will be signed to close the fiscal deficit ahead of the annual budget around June. It can be reduced.

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Pakistan has completed almost all the preliminaries except for external financing. The IMF has demanded approval of the $1.1 billion tranche under the $6.5 billion Extended Fund Facility scheduled for 2019. This program will end in June this year.

“All IMF program reviews require firm and reliable assurances that the borrowing country’s balance of payments deficit will remain stable for the remainder of the IMF program,” said Esther Perez Ruiz. Fully financed, Pakistan is no exception.

It may be recalled that Finance Minister Ishaq Dar had said last week that assurance of external financing was not included in the conditions of IMF’s funding clearance.

He said Pakistan needs $5 billion in external financing for the balance of payments deficit in the fiscal year ending June 30, while the IMF believes it should be $7 billion.

Esther Perez Ruiz added that Pakistan is determined to close the exchange rate gap after the massive devaluation of the rupee.