IMF Rejected Cash-Strapped Pakistan Govt’s Claims of Meeting Loan Conditions

The IMF has rejected the cash-strapped Pakistani government’s assertion that it has satisfied all requirements to reach an agreement with the international financial organisation to release funds under an already agreed-upon loan facility. In 2019, the International Monetary Fund agreed to give Pakistan USD 6 billion in exchange for meeting a number of requirements.

Due to the donor’s desire that Pakistan finish all legalities, the plan was repeatedly derailed, and the final payment is still pending. Ishaq Dar, the minister of finance, and Shehbaz Sharif, the prime minister, have asserted time and time again that there was no justification for delaying the staff-level agreement because Pakistan had fulfilled all the prerequisites.

The Express Tribune newspaper claimed to have received a statement from the fund on Friday refuting the government’s assertion that it had taken all prior steps required to finish the 9th review. Nathan Porter, the IMF’s mission chief in Pakistan, was quoted in the newspaper as saying that the IMF is still working with the Pakistani government to complete the 9th review once the required money is in place and the agreement is finalised.

Porter’s statement refuted what the Pakistani government has been asserting since the face-to-face negotiations concluded inconclusively on February 9th, the newspaper stated. Nathan omitted details about the amount of financing Pakistan will need to arrange in order to complete the 9th review for the USD 1.2 billion loan tranche, which has been delayed by seven months.

Pakistan needs USD 6 billion to close the funding gap by June of this year, according to the finance minister. Pakistan had received guarantees from Saudi Arabia and the United Arab Emirates that they would lend the country USD 3 billion, but there are no clear guarantees for the remaining loans.

Gross official foreign exchange reserves of Pakistan are still at USD 4.5 billion. Up to June of this year, the nation owes the rest of the globe close to USD 4 billion in principal and interest on its debt. According to the sources, Pakistan must also get cash to repay the loans during the first half of the upcoming fiscal year because the government does not have a reliable finance plan for the months of July through December.