WASHINGTON: Pakistan has moved closer to clinching a deal with the International Monetary Fund (IMF) as all 24 members of the Fund’s executive board have received copies of a staff report required to complete the process, diplomatic and IMF sources told Dawn.
The board is meeting on Aug 29 to consider the report on the completion of seventh and eighth reviews of $6 billion loan package signed in 2019. The board will also consider to extend the facility till June 2023.
The documents distributed among the members included a letter of intent from Pakistan, spelling out the country’s plans to meet the IMF’s conditions for reforming the economy.
Pakistan had also submitted a memorandum of understanding on economic and financial policies, along with a technical MoU submitted by the IMF team.
The IMF staff’s memoranda comprised studies and reports prepared for the board, such as those for Article IV consultations, papers on selected issues, statistical annexes, and policy papers.
During the Aug 29 meeting, Pakistan will also submit documents on prior actions and priorities, which will later be included in the meeting’s records.
The so-called gray documents — circulated before the meeting — include the preliminary version of executive directors’ statements to the board. The executive board has also received a rough draft of the press release that would be released if the proposed package for Pakistan is approved.
The IMF deal with Pakistan may include strict conditions on governance, aimed at curbing financial corruption, sources have told Dawn.
“There’s a feeling among international circles that anti-corruption measures introduced by the previous government were too restrictive and often prevented officials from taking major decisions,” one of the sources said.
“But the present government has taken the sting out of anti-corruption tools, which may encourage corruption. The IMF would prefer to have an arrangement that could curb corruption but was not restrictive.”
Reports in the international media claimed that the IMF has asked Pakistan to set up an anti-corruption task force to review all the existing laws that were aimed at curbing graft in the government departments.
According to repots, the new conditions could also require politicians and government officials to declare their assets.
Pakistan and the IMF have already reached an agreement on some of these measures.
On July 13, the IMF announced that it had reached a staff-level agreement with Pakistan to further the under the review of its Extended Fund Facility (EFF) that could bring total disbursements by the Fund to about $4.2 billion.
The agreement was subjected to approval from the IMF’s executive board.
After the Aug 29 meeting, Pakistan may immediately receive about $1.2bn, which could help ease pressure on the nation’s currency and reserves.
Moreover, the IMF loan may unlock more financing from other bilateral sources and lenders.
The July 13 agreement pointed out that the immediate priority to stabilise the economy was the steadfast implementation of the 2023 budget.
It also suggested continued adherence to a market-determined exchange rate and a proactive and prudent monetary policy. The document also stressed the importance of expanding social safety to protect and accelerate structural reforms, including improving the performance of state-owned enterprises and governance.
Published in Dawn, August 22nd, 2022
