Pakistan

IMF asks Pakistan to reduce expenses

Pakistan has a $1 billion international bond repayment due early next month

Reuters November 29, 2022

IMF has not addressed structural issues of taxation. Instead, the proposed measures will make taxation more complex, according to PIDE. photo: file

ISLAMABAD:

The International Monetary Fund (IMF) has asked Pakistan to reduce expenses before talks on the ninth review of a $7 billion loan programme, local media reported on Monday, citing sources.

The finance ministry did not immediately respond to a Reuters request for comment.

Last week, the IMF had said that Pakistan's timely finalisation of a recovery plan from devastating floods is essential to support discussions and continued financial support from multilateral and bilateral partners, on Wednesday.

Pakistan was already battling a full-blown economic crisis, with decades-high inflation and dwindling foreign exchange reserves, when it was hit by floods earlier this year. It had entered a $6 billion IMF bailout programme in 2019, and the ninth review is currently pending.

"The timely finalisation of the recovery plan is essential to support the discussions, along with continuing financial support from multilateral and bilateral partners," IMF resident representative Esther Perez Ruiz said in a message to Reuters.

Read Govt shares revised budget framework with IMF

She added that IMF staff is continuing discussions with Pakistani authorities over policies to reprioritize and better target support toward humanitarian needs, while accelerating reform efforts to preserve economic and fiscal sustainability.

Devastating floods killed more than 1,700 people and inflicted billions of dollars of damage. Pakistani authorities' estimates of the damage have varied from $10 billion to $40 billion.

Pakistan's finance ministry said last week that it would "expeditiously" finish the technical engagement with the IMF as part of the ninth review of the programme, but a firm date for the review completion is yet to be announced.

The funds will be a lifeline for the South Asian nation, which is struggling to convince international markets and ratings agencies that it has the funds to meet external financing requirements, including debt repayments.

Pakistan has a $1 billion international bond repayment due early next month. Its total foreign reserves with the central bank stood at $7.9 billion as of last week.