Pakistan-IMF deal likely to be sealed today

Pakistan is also seeking a three-fold expansion in the Saudi oil facility

ISLAMABAD:

The International Monetary Fund (IMF) is likely to send the draft of a Memorandum of Economic and Financial Policies (MEFP) to Pakistani authorities on Monday — a key step to indicate that the two parties have reached an agreement.

The government wants to conclude an agreement with the international lender for the revival of the $6 billion programme before the approval of the federal budget for the upcoming fiscal year 2022-23 – which needs to be done by June 28.

Official sources have claimed that Pakistan will receive a MEFP from the fund on Monday. Meanwhile, the finance ministry said in a statement Sunday that the IMF will hand over the economic and financial policy for the renewed deal, providing an economic relief package to Pakistan.

“The Pak-IMF deal providing Pakistan with the $1 billion loans will be sealed by tomorrow as IMF plans to hand over Pakistan the economic and financial policy,” the statement said.

Finance Minister Miftah Ismail told the National Assembly (NA) that although the country is rife with negative sentiments expressed by many financial quarters, it looks very likely that the restoration of the IMF programme is in the offing.

He said that keeping in view the erratic policies followed by successive governments in respect of managing the economy, almost all international financial institutions have become wary while dealing with Pakistan.

Read PM promises to release details of PTI-IMF deal

Unfortunately, he added, instead of the tendency to adopt double-dealing as the primary method to tackle financial difficulties, Pakistani financial managers consider it to be an essential part of their negotiation strategy that is deeply resented by donor agencies.

Moreover, Prime Minister Shehbaz Sharif had asserted that the terms with the IMF had been finalised and the deal would close soon, barring any other conditions set by the global lender.

Pakistan is also seeking an increase of $2 billion in the IMF programme and wants its tenure to be extended by a year. During the week ending on June 26, the government revised its budgetary targets by reversing purposed relief for the salaried individuals and imposing a super tax on 13 industries.

Saudi oil facility

The government is negotiating an oil facility on deferred payments with Saudi Arabia.

Under the Pakistan Tehreek-e-Insaf (PTI) government, the kingdom had offered a $4.2 billion package to Pakistan, including a $1.2 billion oil on deferred payment facility.

The current government after taking power in April tried to negotiate a similar deal, seeking another $3 billion in cash and $1.2 billion in oil on deferred payment, but the deal never materialised.

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Now, the government has requested the Saudi government to expand the oil facility by three folds to $3.6 billion. Sources say the negotiations for a $3.6 billion oil facility are underway and Pakistan has strong prospects of getting the deal.

Currently, Pakistan is receiving $100 million worth of oil every month from Saudi Arabia under the facility and if the package is revised upwards, it will be receiving $300 million worth of oil on deferred payments.

(With input from DNA)