External assurance first, then agreement, IMF Director

ISLAMABAD, 25,2023- International Monetary Fund (IMF) Communications Director Julie Kozak has clarified that a staff level agreement with Pakistan will be made only after external financing assurances from multilateral and bilateral partners.

The staff-level agreement will take place only when certain key points are settled, and only after the assurances from the World Bank, the Asian Development Bank, the Asian Infrastructure Investment Bank (AIIB) and other bilateral partners, especially China, Saudi Arabia and the United Arab Emirates the next step regarding Pakistan will be taken.

Pakistan’s economy is facing challenges such as slow growth rate and high inflation, all challenges have been brought to light due to the devastating floods in Pakistan.

While the IMF’s representative in Pakistan, Esther Perez Ruiz said that agreement on the fuel subsidy scheme is necessary before signing the agreement. The fund will seek further details from the government on the proposed fuel scheme, including how it will be implemented and what safeguards will be provided to prevent misuse.

Meanwhile, top government sources confirmed on Friday that the staff-level agreement was delayed due to lack of confidence on the part of the IMF, lack of capacity to implement the fund’s reform programs and delaying tactics by the IMF. Due to which the two sides have so far failed to agree on the Memorandum of Economic and Financial Policies (MEFP).

The efforts of the Pakistani authorities to complete the ninth review and issue the $1.2 billion tranche, to be approved by the IMF Executive Board by April 10, 2023, have suffered a major setback and it seems almost impossible to complete the internal process within the stipulated period.