IMF to change mission chief

Decision comes before board meeting that may not discuss bailout revival

ISLAMABAD:

The International Monetary Fund (IMF) has decided to replace its mission chief to Pakistan, Ernesto Rigo, amid chances that the executive board of the fund will not take up Pakistan’s request for the revival of $6 billion loan programme on January 12.

Sources said that the IMF had decided to replace its Washington-based mission chief to Pakistan. Rigo had finalised loan negotiations with Pakistan in May 2019, which were started by his predecessor Herald Finger in November 2018.

The IMF has not yet formally announced the replacement of Rigo, who has now been appointed the mission chief to Lebanon - another country that is passing through a crisis and is in negotiations with the IMF.

Earlier, the IMF had replaced Pakistan’s country representative Teresa Daban with another Spanish national Esther Perez. Daban completed her four-year extended period in November.

Based on the original schedule, the sources said, Rigo was in charge of Pakistan’s case till January 12, which was also the tentative date for the board meeting agreed between both sides on November 21.

The IMF’s response to the change of mission chief and his replacement was awaited till the filing of the story.

It was not clear whether Rigo would keep looking after Pakistan’s case after January 12 and until his successor is formally announced.

Rigo remained Pakistan’s mission chief for about three years but had difficulties in getting the programme completed due to the challenging programme design and government’s failure to fulfill its commitments.

Finance Minister Shaukat Tarin said in November that the IMF had set five prior conditions to take Islamabad’s case to its board in January for the revival of the stalled programme.

Two major IMF conditions that were hampering the IMF board meeting on January 12 were approval of the Rs375 billion mini-budget by the National Assembly and the State Bank of Pakistan Amendment Bill 2021 by both houses of parliament.

The finance ministry said on Sunday that the government had introduced both bills in the National Assembly and the IMF moved the recommendation of sixth loan tranche to its board for consideration on January 12.

“As soon as the prior actions are completed by Pakistan, which are being pushed hard by the government, the IMF board will consider it for approval. The IMF board can move whenever our actions are completed,” said the finance ministry.

Read Cabinet meets another IMF condition for $1b loan

As implementation of the two conditions remains pending, the IMF has not yet formally listed Pakistan’s case for consideration of its board on January 12. This date had been announced by Tarin and his spokesperson to revive the programme.

The completion of the sixth review has been pending since June last year, showing the government’s inability to fulfil the commitments. This has also reduced the actual loan size that Pakistan could have secured from the IMF.

So far, the IMF has disbursed only $2 billion against $4.6 billion under the original May 2019 schedule.

Sources in the finance ministry said that it had become almost impossible to meet the January 12 deadline and now the government was targeting the end of January to avoid further complexities in Pakistan-IMF relations.

The government’s strategy was to at least present both the SBP Amendment Bill and Finance Supplementary Bill in the National Assembly for final vote by January 12. This is being done to seek more time from the IMF by showing the commitment to implementing both the conditions, said the sources.

The sixth review would cover the period of up to June 2021 only. As per the revised schedule agreed in March last year, by September 2021, the seventh review for $740 million and eighth review by December 3, 2021 for another $740 million had to be completed.

The programme is going to expire in September this year, as per the schedule agreed between both the sides.

Sources said that the schedule for the disbursement of remaining loan amount and the completion of reviews would undergo yet another change.

Subject to the completion of sixth review this month, the government is targeting to hold the next review by March for end-December 2021 period.

However, a significant delay in completion of the sixth review may force both sides to go back to the drawing room and reset the conditions, said the sources.

Things might also get complicated after the change of mission chief, they said.

The opposition and the government have joined hands to fast-track the approval of Rs375 billion mini-budget to meet the IMF deadline.

The Senate is now expected to give its recommendations on the Finance Supplementary Bill by Monday or Tuesday while the National Assembly session is also expected to begin on Monday to approve the mini-budget.

On the same day, the National Assembly Standing Committee on Finance will take up the SBP Amendment Bill 2021 for approval.

Published in The Express Tribune, January 8^th, 2022.

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