Pakistan, IMF begin talks on $7bn loan review

By Reuters
Published : 29 Nov 2022 07:42 PM | Updated : 29 Nov 2022 07:42 PM

Pakistan and the International Monetary Fund have begun talks online on a ninth review of a $7 billion loan programme, the Finance Ministry said on Monday, after a media outlet reported that the lender had asked the country to cut its expenses, Reuters reports.

The government has shared fiscal data, including for floods and related expenditures, with the IMF, and a team from the agency is expected to visit Islamabad soon, the ministry added.

Under the IMF's Extended Fund Facility (EFF), Pakistan secured a $6 billion bailout in 2019 that was topped up with another $1 billion earlier this year.

"As part of the 9th review under the EFF, remote discussions continue between IMF staff and the Pakistani authorities over policies to re-prioritize and better target support toward humanitarian and rehabilitation needs," the lender's resident representative, Esther Pérez Ruiz, said in a statement.

Pakistan has been reeling from floods this year that killed more than 1,700 people, destroyed farmland and infrastructure and exacerbated an economic crisis marked by decades-high inflation and dwindling foreign exchange reserves.

"The IMF understands that the floods have changed the macroeconomic assumptions on which the programme was designed," the ministry said.

"Detailed analysis is being conducted by their team using the data provided."

Pakistan reserves stood at $7.8 billion as of Nov 18, barely enough to cover imports for a month.

The Pakistan Stock Exchange fell around 2 per cent on Monday, its first day of trading after the central bank unexpectedly hiked its key policy rate to 16 per cent last week.

ARY News reported on Monday that the IMF had asked Pakistan to reduce expenses before talks on the ninth review.

The IMF's board approved the seventh and eight reviews in August, allowing the release of more than $1.1 billion.

The ninth review has been pending since September. The IMF said last week that finalisation of a recovery plan from the floods was essential to support discussions, along with continued financial support from multilateral and bilateral partners.