Pakistan agrees to share budget details with IMF to unlock stalled programme

• Finance Minister Ishaq Dar announces an agreement to provide the IMF with budget details to unlock delayed funds.
• Dar criticizes the PTI government for damaging the country’s economy and accuses Imran Khan of not honoring the IMF agreement.
• Pakistan urgently seeks to revive the $6.5 billion IMF program before its expiration on June 30, exploring options for completing the pending reviews and securing the next tranche of funds.

Finance Minister Ishaq Dar has announced that the coalition government has reached an agreement to provide the International Monetary Fund (IMF) with details of its upcoming budget. This move aims to unlock the funds that have been delayed.

During an interview on Geo News program Jirga, Dar stated, “They have requested additional details, such as the budget specifics, and we will provide them with that information.” He reiterated that Pakistan has fulfilled all the conditions set by the IMF to revive the halted $6.5 billion program. Dar urged the global lender to release the funds before the federal budget, which is scheduled for next month.

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Dar criticized the previous Pakistan Tehreek-e-Insaf (PTI) government, blaming them for “destroying” the country’s economy. He highlighted that record inflation was witnessed during Imran Khan’s tenure as the prime minister and accused him of not honoring the agreement with the IMF.

The IMF’s disbursement of $1.1 billion to Pakistan, part of the $6.5 billion rescue package agreed upon in 2019, has been delayed since November. Talks between the IMF and Pakistan were held in February to conclude the 9th review, but the funds have not been released yet. The timely release of these funds is crucial for Pakistan to unlock other bilateral and multilateral financings.

The finance minister expressed his desire for the IMF to release the funds before the budget is presented in early June. He emphasized that conducting the 9th and 10th reviews together would be unfair.

Pakistan is making last-ditch efforts to revive the stalled Extended Fund Facility (EFF) program with the IMF. The ongoing $6.5 billion program is set to expire on June 30, adding urgency to the negotiations. The completion of the 9th review, which was due in November of the previous year, has been a subject of ongoing discussions between Pakistan and the IMF. Despite multiple online sessions, differences persist regarding the conditions set by the IMF for the Staff Level Agreement (SLA).

To move forward, two options are being considered. The first option involves signing the SLA immediately, submitting Pakistan’s request for the next tranche of $1 billion to the IMF Executive Board, and securing an extension of the EFF program to complete the 10th and 11th reviews. The second option entails combining the 9th and 10th reviews, sharing the upcoming budgetary numbers with the IMF, and signing the SLA after the budget announcement. The approval of the SLA by the parliament would then enable the IMF’s Executive Board to approve the combined tranches and extend the EFF program for the 11th Review, likely to be completed by July or August 2023.

Both options require consensus-building and modalities to be worked out between the parties involved. It is crucial to overcome the existing approach of maintaining the status quo to achieve a breakthrough in the negotiations, according to an anonymous official familiar with the discussions.