IMF Denies Reports of Asking Pakistan to Raise $8 Billion in Fresh Financing
Key Highlights :
The International Monetary Fund (IMF) on Sunday denied reports that it has asked Pakistan to arrange $8 billion in fresh financing to cover the requirements beyond June 30th period. Miss Esther Perez Ruiz, the Resident Representative, issued a statement clarifying that the amount of external financing necessary to ensure that Pakistan stays current on its external payments remained unchanged throughout discussions for the 9th review of the programme.
According to the Pakistani authorities, the demand for the additional $2 billion was for the period beyond June 30th -the date when the IMF programme will expire. The Ministry of Finance officials argued in official papers that due to contraction in the current account deficit, the IMF should instead reduce the demand from $6 billion to $5 billion.
The sources said that the IMF also has issues with restrictions imposed on the imports. But the Ministry of Finance officials were of the view that import compression was an economic outcome of the slowdown of the economy and the price elasticity of demand due to currency devaluation.
On last Monday, Finance Minister Ishaq Dar informed the executive director of the IMF that the remaining $3 billion can only be arranged once the IMF announces staff-level agreement and the board approves the ninth review along with the $1.2 billion tranche.
Obtaining commitments of “significant additional financing” is essential before the IMF approves the release of pending bailout funds that are crucial for Pakistan to resolve an acute balance of payments crisis, the IMF spokeswoman said few days ago. Dar also said on Thursday that Pakistan would not default on any foreign liability, with or without an IMF programme.
Esther stated on Sunday that “the IMF will continue to support Pakistan in the best possible way to secure sufficient financing by partners”. She added that the amount of financing necessary to support Pakistan’s implementation efforts and ensure that Pakistan stays current on external payments has remained unchanged throughout discussions under the ninth review.
Therefore, it is clear from the statement issued by IMF’s representative that there is no truth to the reports that the IMF is asking Pakistan to raise $8 billion in fresh financing. The IMF will continue to support Pakistan in the best possible way to secure sufficient financing by partners and ensure that Pakistan stays current on external payments.
