A support team from the Washington-based International Monetary Fund (IMF) has reached Pakistan to discuss the first part of the next long-term loan program with the cash-strapped country’s financial team comprising of officials from the State Bank of Pakistan (SBP) and the Finance Ministry. An IMF mission will arrive in Pakistan on May 16 to take the talks forward as it seeks USD 6-8 billion for the next three years through an Extended Fund Facility (EFF).
The upcoming budget and financial data from different departments of the country will also be discussed with the IMF team scheduled to be in the nation for 10 days. Pakistan has started stopping more subsidies in order to better balance its books, a repetitive demand of the IMF.
The meeting with IMF officials takes place just a month after Pakistan completed a $3 billion short-term program that had saved the country from defaulting. The country in dire financial straits received $1.1 billion dollars. The Islamic nation is expected to ask for a rollover of loans worth $5 billion from Saudi Arabia, $3 billion from the United Arab Emirates and $4 billion from China for a grand total of $12 Billion in order to meet a $23 billion gap in external financing in the current fiscal, according to reports in Pakistani media.
Even though the IMF team is in Pakistan to discuss a new EFF the international lender has expressed strong doubts over the nation’s capacity to pay off its loans. The Washington-based lender believes Pakistan needs $123 billion over the next five years.
In a statement, the global lender stated that the impecunious country needs accelerated reforms are more important than the size of the (IMF) program. The country is still facing a major fiscal shortfall and the external account deficit has been controlled but at the expense of growth. Pakistan saw negative growth last year and this year it is only expected to grow at 2%, with inflation being a key issue which was 17% in April although much lower than the 38% in May of last year.
Dhruv Yadav
