Pakistan has been negotiating an agreement with the International Monetary Fund (IMF) since January 2023. The IMF has specified that Pakistan must receive prior approval before providing any additional subsidies.

Negotiations have hit a snag over a plan announced by Prime Minister Shehbaz Sharif in March to charge wealthy fuel consumers more to subsidise prices for the poor who have been severely impacted by inflation.

Despite meeting almost all of the Fund’s conditions, the government is struggling to convince the lender to release the tranche. On a separate issue of securing confirmation on the external financing gap of $5 billion by June 2023, the Kingdom of Saudi Arabia and the United Arab Emirates have provided over $2 billion and $1 billion respectively.

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The formal agreements with these countries are expected to be signed soon. The Pakistani authorities are complaining that the IMF has placed prior actions before signing the staff-level agreement, which was not done in the past.

According to The News, the IMF asks for confirmation from commercial banks before signing the agreement, while banks are asking for IMF’s board approval and the revival of the Fund program to refinance loans worth $2-3 billion.

Finance Minister Ishaq Dar has assured US diplomat Andrew Schofer that the government is committed to completing the ongoing IMF program.