The International Monetary Fund (IMF) is helping the government of Pakistan finish the ninth assessment of a bailout programme, the head of the IMF’s mission there said on Friday.
He stressed the importance of financial aid in keeping the cash-strapped nation from collapsing economically. To get the $6.5 billion bailout agreed upon in 2019 back on track, Pakistan and the IMF have reviewed fiscal policy measures since February.
Due to a current account deficit, Pakistan urgently needs this funding to avoid defaulting on its external debts. Pakistan’s central bank now only has enough foreign exchange reserves to cover four weeks’ worth of regulated imports.
When the necessary money is in place, and the agreement is finalised, the IMF will work with the Pakistani authorities to complete the ninth review, according to a statement released by mission commander Nathan Porter.
A request for comment sent to Pakistan’s Ministry of Finance went unanswered for some time.
Pakistan has agreed to a set of criteria, including fully funding its balance of payments imbalance for the current fiscal year, which ends in June.
Despite Pakistan’s announcement of $3 billion in financial support from Saudi Arabia and the United Arab Emirates, no such money has been received. Islamabad’s loans from China, a reliable ally, have been refinanced.
Pakistan reversed subsidies, raised energy and fuel prices, raised its key policy rate, switched to a market-based currency exchange rate, lined up external financing, and raised over Rs170 billion ($613 million) in new taxes as required by the IMF to secure the deal.
Inflation reached a record high of 36.4% in April, mainly due to the fiscal adjustments.
Before the end of the project in June, the IMF will release an additional tranche of $1.4b for Pakistan.