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Islamabad: The International Monetary Fund has raised serious objections to it Pakistan budget For 2023-24, reduce the chances of the global lender reviving the loan program that the cash-starved country has been seeking to meet its international debt obligations.
Since the expiration of the IMF program – which has been delayed since late last year due to the policy framework – in two weeks, on June 30, Pakistan has been racing against time to implement measures to reach an agreement with the IMF that will not only lead to an agreement. $1.2 billion, which is part of the $6.7 billion bailout package, but also opens up money flows from other multilateral lenders and friendly countries.
However, the IMF is sticking to its tough conditions while reluctant to back-release funds as it pushes Islamabad further to raise revenue.
However, Prime Minister Shahbaz Sharif’s government is making a last-ditch effort to revive the IMF program in the country, with a $2 billion financing gap and exchange rate policy among the biggest obstacles.
In a last-ditch effort, Finance Minister Isaac Dar held a virtual meeting with IMF mission chief Nathan Porter on Tuesday to secure the IMF program. The meeting ended inconclusively. Ayşe Ghauspaşa, Minister of Finance, said that the IMF is not satisfied with the budget framework for 2023-24, and another round of meetings will now be held to address the IMF’s concerns.
In the absence of the IMF, the risk of Pakistan defaulting on its external debt has increased. And the country’s foreign reserves fell to a very low level, below $3 billion, after it paid off a $1 billion trade loan to China ahead of its due date.
The drop in reserves, which barely provides cover for three weeks of imports, could add pressure on the rupee against the US dollar, which was trading at 287 rupees to the dollar on the interbank market on Wednesday.
Moody’s Investors Service warned on Wednesday that Pakistan is increasingly at risk of failing to restart its bailout program with the International Monetary Fund that brings the country closer to a sovereign debt default. “There is a heightened risk that Pakistan may be unable to complete the IMF program which expires at the end of June,” said Grace Lim, a sovereign analyst at the ratings firm in Singapore.
“Without an IMF program, Pakistan could default, given its very weak reserves,” Lim was quoted as saying by Bloomberg.
“Pakistan’s financing options beyond June are highly uncertain, even as its external payments remain substantial over the next few years,” Lim said. She added that continued engagement with the IMF would support additional financing from other multilateral and bilateral partners, which could reduce the risk of default.
Pakistan is staring at about $23 billion in foreign debt payments for the 2023-24 fiscal year, which begins in July. The amount is nearly five times its reserves, most of which are taken from concessional multilateral and bilateral sources.
Since the expiration of the IMF program – which has been delayed since late last year due to the policy framework – in two weeks, on June 30, Pakistan has been racing against time to implement measures to reach an agreement with the IMF that will not only lead to an agreement. $1.2 billion, which is part of the $6.7 billion bailout package, but also opens up money flows from other multilateral lenders and friendly countries.
However, the IMF is sticking to its tough conditions while reluctant to back-release funds as it pushes Islamabad further to raise revenue.
However, Prime Minister Shahbaz Sharif’s government is making a last-ditch effort to revive the IMF program in the country, with a $2 billion financing gap and exchange rate policy among the biggest obstacles.
In a last-ditch effort, Finance Minister Isaac Dar held a virtual meeting with IMF mission chief Nathan Porter on Tuesday to secure the IMF program. The meeting ended inconclusively. Ayşe Ghauspaşa, Minister of Finance, said that the IMF is not satisfied with the budget framework for 2023-24, and another round of meetings will now be held to address the IMF’s concerns.
In the absence of the IMF, the risk of Pakistan defaulting on its external debt has increased. And the country’s foreign reserves fell to a very low level, below $3 billion, after it paid off a $1 billion trade loan to China ahead of its due date.
The drop in reserves, which barely provides cover for three weeks of imports, could add pressure on the rupee against the US dollar, which was trading at 287 rupees to the dollar on the interbank market on Wednesday.
Moody’s Investors Service warned on Wednesday that Pakistan is increasingly at risk of failing to restart its bailout program with the International Monetary Fund that brings the country closer to a sovereign debt default. “There is a heightened risk that Pakistan may be unable to complete the IMF program which expires at the end of June,” said Grace Lim, a sovereign analyst at the ratings firm in Singapore.
“Without an IMF program, Pakistan could default, given its very weak reserves,” Lim was quoted as saying by Bloomberg.
“Pakistan’s financing options beyond June are highly uncertain, even as its external payments remain substantial over the next few years,” Lim said. She added that continued engagement with the IMF would support additional financing from other multilateral and bilateral partners, which could reduce the risk of default.
Pakistan is staring at about $23 billion in foreign debt payments for the 2023-24 fiscal year, which begins in July. The amount is nearly five times its reserves, most of which are taken from concessional multilateral and bilateral sources.
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