IMF, World Bank postpone Pakistan trips

Fund delays disbursements, refuses to set new dates for talks.

WASHINGTON:

The International Monetary Fund (IMF) has postponed talks in Pakistan next week due to security concerns, an IMF spokesman said on Wednesday, delaying a deal to disburse more than $3 billion in funds to the country.

The killing of Osama bin Laden by US special forces on Sunday at a compound near Islamabad has raised worries about the potential for retaliatory attacks.

“An IMF mission to meet Pakistani authorities in Islamabad … has been postponed in light of security developments in Pakistan,” an IMF spokesman told Reuters. “No new dates have been set at this stage.”

The IMF mission was meant to discuss budget targets for the fiscal year 2011/12 and to review economic and policy developments under Pakistan’s $11 billion IMF loan programme, the spokesman said.

The World Bank said it had also postponed travel to Pakistan although loan disbursements for development and social projects were not affected, including funding for rebuilding of areas devastated by massive flooding last year. It is not unusual that missions by international institutions are postponed when geopolitical events give rise to concerns staff could face harm.

IMF disbursements to Pakistan of two remaining tranches of about $3 billion under the program is critical to help the nation through a financial crunch due to a widening fiscal deficit brought about by the flooding.

That said, analysts said last month Pakistan’s foreign exchange reserves hit a record high of $17.95 billion in the week ended March 26 although they said they eased to $17.31 billion in the week ended April 9.

Pakistan agreed to an IMF loan programme in November 2008 to avert a financial crisis. So far, about $8 billion of the loan has been disbursed, while an additional $451 million in funding has since been authorised to cope with damage caused by the summer floods.

Published in The Express Tribune, May 5^th, 2011.