IMF ‘carefully watching’ Afghanistan, too soon to predict spillover to Pakistan

We stand ready to continue supporting Islamabad achieve objectives of debt sustainability, says global lender

LONDON:

The International Monetary Fund (IMF) is "carefully watching" the Taliban's advance in Afghanistan, a spokesperson said on Friday, but added it was too early to predict the economic spillover in neighbouring IMF programme countries like Pakistan.

Taliban insurgents tightened their grip on Afghanistan on Friday, wresting control of its second and third biggest cities.

"The IMF is carefully watching the fast-moving situation on the ground in Afghanistan," an IMF spokesperson told Reuters. "It is premature to speculate on the outcome and potential economic spillovers to Pakistan".

Pakistan has a $6 billion IMF programme that began in 2019.

The government and the IMF staff have been in talks in recent months to try to finalise the programme's latest progress review but are yet to reach agreement.

"We stand ready to continue supporting Pakistan achieve the objectives of debt sustainability and strong and sustainable growth," the IMF spokesperson said.

Also read: Tarin vows to protect IMF, KPP programmes

"No date is currently set for concluding these (review) talks, as we are focused on the reforms and policy steps needed to achieve the programme objectives," which include reducing debt and reforming the country's energy sector, the spokesperson added.

On Thursday, Finance Minister Shaukat Tarin vowed to protect both the IMF deal and the Kamyab Pakistan Programme -the two key policy objectives that seem paradoxical due to the international lender’s objections to the Rs1.6 trillion programme.

To questions about the government’s plans for the IMF programme and launching of the Kamyab Pakistan Programme, the finance minister made it clear that both these programmes would go ahead as per plan.

The IMF has raised questions over Kamyab Pakistan Programme and the nature of these questions is the same as reported in The Express Tribune, the finance minister said.

He said that the IMF raised questions about the capacity to spend Rs1.6 trillion funds, giving 100% guarantees to the banks against their losses.

“We are preparing replies that will be sent to the IMF in the next few days and after that, the two sides would sit and negotiate, the finance minister said.

The Kamyab Pakistan Programme is the single largest initiative ever planned by any government that talks about giving interest-free highly subsidized loans of Rs1.6 trillion to 30 million people over a period of three years. But the bureaucracy and the IMF raised objections to the highly ambitious plan.