Wednesday 30 / October / 2024
Islamabad: Pakistan Prime Minister Shehbaz Sharif on Friday said the International Monetary Fund (IMF) was giving Islamabad a tough time on the bailout, reported Geo News.
"As we speak, an IMF delegation is in Islamabad and giving a very tough time to the finance minister and his team. I will not go into detail about this further but our economic challenges are unimaginable. The IMF conditions which we have to fulfill are beyond imagination but we have to do it," said Shehbaz Sharif. Pakistan secured a USD 6 billion IMF bailout in 2019, which was topped up with another USD 1 billion last year.
An IMF delegation is in Pakistan to restart stalled talks for releasing the USD 1 billion loan. A team of the IMF -- headed by Mission Chief Nathan Porter -- is currently in Pakistan holding parleys for the ninth review which will continue till February 9.
After months of reluctance, the country's depleting forex reserves and worsening economic situation forced the government to accept all the conditions set by the Washington-based lender.
A staff-level agreement is expected after the conclusion of the talks under the USD 6.5 billion Extended Fund Facility (EFF).
Meanwhile, the Pakistani Rupee plunged to a historic low against the dollar after Shehbaz commented that the IMF is giving Pakistan "a tough time" and the lender's demands to do more on the economic front, reported Geo News.
In the interbank market during intra-day trade, the rupee was trading at 278.67 against the dollar at 12:48 pm, according to the Exchange Companies Association of Pakistan (ECAP).
The local currency had closed at Rs 271.35 against the greenback a day earlier making it a downfall of Rs 4.65.
AA Commodities Director Adnan Agar told Geo.tv that the rupee's downward spiral is expected till Pakistan secures a staff-level agreement with the IMF, reported Geo News.
The analyst said that the market is reacting to the reports coming on the demands being put forward by the IMF to the government.
Agar warned that if the government fails to secure a staff-level agreement with the Fund then the rupee will take more hits.
"If the IMF deal is done timely then it would appreciate but not that much," said Agar. He added that the rupee will continue to remain weak till Pakistan receives money from the IMF.
A day earlier the IMF rejected the government's circular debt management plan, reported Geo News.
And today it was reported that the Fund has conveyed to the authorities to undertake substantial qualitative and sustainable tax and non-tax revenue measures to fetch additional revenues for filling the projected gap of Rs600 billion in the fiscal framework.
The IMF delegation has asked the government to jack up the Federal Board of Revenue's (FBR) tax collection target to align it with the projected nominal growth in the current fiscal year mainly with the help of a surge in the CPI-based inflationary pressures, reported Geo News.
The Fund seems ready for providing an adjuster on flood expenditures once the fiscal framework is finalised.
But it will depend on how much expenditures could be occurred on floods both on the development and non-development side of the budget especially through disbursements of stipends through the Benazir Income Support Programme (BISP).
As the talks continue, alarmingly, the foreign exchange reserves held by the State Bank of Pakistan (SBP) nosedived to just USD 3.08 billion as of January 27, reported Geo News.
The country faces a double-edged sword, as the dollar inflows in the shape of loans from multilateral and bilateral have severely choked and shrunk.
IMF has conveyed to the Pakistani authorities to undertake substantial qualitative and sustainable tax and non-tax revenue measures to fetch additional revenues for filling the projected gap of Rs 600 billion in the fiscal framework, reported Geo News.
