In a setback for Pakistan, the International Monetary Fund (IMF) Executive Board has excluded the country from its upcoming meetings, raising concerns about the completion of the 9th review under the Extended Fund Facility (EFF) programme. The IMF’s executive board calendar reveals that Pakistan is not on the agenda for the scheduled meetings until June 29, leaving little time to restart the $6.7 billion bailout programme before the end of the current financial year on June 30, 2023.
Pakistan is currently facing challenges in securing fresh loans to bridge its $6 billion refinancing gap. Despite the impending expiration of the current programme, the Finance Ministry is still striving to reach an agreement with the IMF. However, the lender has raised concerns about Pakistan’s budget for the fiscal year 2023-24, particularly regarding non-tax revenue and the need to broaden the tax base.
Last week, the IMF questioned the credibility of Pakistan’s budgetary numbers, which has cast a shadow of doubt over the country’s ability to meet the conditions for the bailout programme. In response, the Ministry of Finance issued a press statement on Friday, attempting to address these concerns. However, the statement failed to dissipate the doubts surrounding Pakistan’s economic situation.
The IMF and Pakistan may now consider combining the pending ninth review with the tenth review in the new fiscal year. Such a move would likely require Pakistan to implement more stringent tax collection measures in exchange for a larger bailout package.
The delay in completing the 9th review and the exclusion of Pakistan from the upcoming IMF Executive Board meetings have intensified the challenges faced by the country’s economy. As the June 30 deadline approaches, the Pakistani government and the IMF will need to work diligently to resolve their differences and pave the way for the resumption of the bailout programme.
Pakistan’s ability to secure the IMF’s support is crucial for stabilising its economy, attracting foreign investments, and addressing the refinancing gap. The outcome of the negotiations and the subsequent decisions taken by both parties will have far-reaching implications for Pakistan’s financial stability and economic growth in the coming months.
