In a meeting held on the sidelines of the New Global Financial Pact in Paris on June 22, 2023, the Prime Minister of Pakistan, Shehbaz Sharif, met the managing director of the International Monetary Fund (IMF), Kristalina Georgieva, as a last-ditch effort to acquire a much-needed loan to save the cash-strapped nation, a media report said.
Shehbaz Sharif left for Paris on June 21, 2023, for the summit, which will take place on June 22-23, 2023.
Both sides exchanged views on the ongoing programmes and cooperation during the meeting. The Minister for Climate Change, Sherry Rehman, economic minister Ayaz Sadiq, and information minister Marriyum Aurangzeb were also present.
In May 2023, Sharif had a telephonic contact with Kristalina and even wrote three letters to her. Despite these attempts, hopes are diminishing for the revival of the programme that expires on June 30, 2023.
The IMF signed a deal in 2019 to provide six billion USD to Pakistan on fulfilment of certain conditions. Recalling their last telephonic conversation on May 27, 2023, Sharif apprised Kristalina about the economic outlook and outlined the steps coming by the government for economic growth and stability.
The Prime Minister underscored that all the prior actions for the ninth review under the Extended Fund Facility had been completed, and the Pakistani government was fully committed to fulfilling its obligations as agreed by the IMF. The prime minister expressed hope that funds allocated under the IMF (Extended Fund Facility) would be released as soon as possible.
The IMF Managing Director shared her institutional perspective on the ongoing review process. The meeting provided a useful opportunity to take stock of the progress that is in context.
“If this request of the PM with IMF MD is turned down, then there will be no possibility of revival of the fund’s program under the $6.7 billion EFF. If the meeting is successful, then both sides will achieve a breakthrough, it will create some breathing space for Pakistan’s falling economy,” a senior finance ministry official said.
Currently, the Foreign Exchange Reserves held by the state of Pakistan, the country’s central bank, stands at less than four billion, barely enough to cover less than a month’s import.
Pakistan’s efforts to unlock access to the already agreed six billion loan package is in a quagmire as the budget needs to satisfy the global lender to secure the release of more bailout money for the cash-strapped country.
Pakistan’s Junior Financial Minister, Dr Aisha Pasha, said that Pakistan has requested the IMF to consider reducing the six billion external financial requirements based on the new current account deficit data, but the lender did not agree. She explained that there was an understanding to arrange three billion before the staff-level agreement and the remaining three billion after that, but the IMF was insisting on demonstrating six billion.
When asked about a backup or secondary plan in case the IMF talks fail, Dr Pasha said that “There is no option other than going back to the IMF, and I categorically say that there is no Plan B.” She reiterated that the government’s aim was to pursue the IMF Programme
With the reserves at a critical level for the past several months, Pakistan was expected to get around 1.4 billion from October 2022 as part of the EFF’s ninth review. But almost eight months later, the tranche has not materialised as the fund says that Pakistan failed to meet important pre-requisites.
Pakistan’s economy has been in a free-fall mode for the last many years, bringing untold pressure on the masses in the form of unchecked inflation, making it almost impossible for a vast number of people to make ends meet.
On June 17, 2023, Pakistan’s all-weather friend and iron brother, the Peoples Republic of China (PRC) extended one billion to the cash-strapped nation in order to support its critically low foreign reserves.