Pakistan committed to IMF Program: Miftah

May 27, 2022

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Finance Minister Miftah Ismail said the government is committed to resuming the International Monetary Fund (IMF) program and returning the country to a path of sustainable growth.

In a statement after returning from Doha, Qatar, where talks between Islamabad and the fund to revive the stalled program were underway May 18-25, the finance minister said the country’s financial delegation had had very useful and constructive talks with the IMF. team for the last week.

Miftah said in a tweet: “We discussed significant discrepancies in FY22, partly caused by fuel subsidies granted in February 2022. We discussed targets for fiscal year 23, when, in the face of high inflation, declining foreign exchange reserves and a large current account deficit, we will need to pursue a tight monetary policy and strengthen our financial position.” The fiscal year 23 deficit will narrow, he added. He said the IMF team had stressed the importance of cutting fuel and energy subsidies that were provided by the previous government in violation of its own agreement with the fund.

On the other hand, the International Monetary Fund (IMF) highlighted the urgency of concrete policy action by the government to end fuel and energy subsidies and in the upcoming fiscal year 2022-23 budget to revive the stalled lending program. The fund said in a statement that an IMF mission led by Nathan Porter was to hold both face-to-face and virtual talks with Pakistani authorities from May 18 to 25 in Doha, Qatar, on measures to ensure macroeconomic stability and improve support for sustainable development. growth in Pakistan. Closing the mission, Porter said the Mission had very constructive discussions with the Pakistani authorities to reach agreement on policies and reforms that would lead to the completion of the authorities’ forthcoming seventh review of the IMF’s Extended Financing Facility-supported reform program. Agreement.

He added that significant progress had been made during the mission, including on the need to further address high inflation and elevated budget and current deficits while adequately protecting the most vulnerable. In this regard, a further increase in key interest rates on May 23 is a welcome step. On the budget side, there have been deviations from the policy agreed upon in the last review, due in part to fuel and electricity subsidies announced by the authorities in February. “The team stressed the urgency of concrete policy actions, including those related to the elimination of fuel and energy subsidies and the FY 2023 budget, to achieve the goals of the program,” he added.

He also said that the IMF team looked forward to continuing dialogue and working closely with the Government of Pakistan on measures to ensure macroeconomic stability for the benefit of all Pakistani citizens, the statement said. This was the second time that Pakistan and the IMF tried to reach a staff-level agreement on the 7th review of the US$6 billion Expanded Financing Facility but failed. Disagreements can seriously shake the markets. Previously, even the last PTI government failed to convince the IMF to complete the seventh review and issue a tranche of loans for almost $1 billion.