Finance Minister Ishaq Dar on Wednesday hinted that the International Monetary Fund (IMF) programme may expire on June 30 without revival due to “restricted time” and apologised to businessmen for the hardships they faced because of a highly challenging economic situation.
“Our efforts are aimed at completing the second IMF programme in the country’s history, although time has been restricted and the programme is ending on June 30,” Dar said while speaking to a delegation of Rawalpindi, Islamabad and Sarhad Chambers of Commerce and Industry.
Since 1958, Pakistan has signed 22 IMF programmes but it failed to complete all barring the 2013-16 programme, thanks to nearly 18 waivers from the IMF.
Failure to complete the ongoing programme will further widen the trust deficit between Pakistan and the financial world. Pakistan had signed the current 36-month $6 billion Extended Fund Facility in July 2019. The IMF, on request of the then finance minister, Miftah Ismail, extended the programme by nine months to June 30, 2023 and its size was also increased to $6.5 billion.
Over the past almost four years, the programme has been derailed at least four times, including on two occasions during the tenure of the current coalition government.
It has now been proven that it was a wrong decision on the part of Miftah Ismail to get extension from the IMF instead of negotiating a new programme.
The coalition government still needs to complete the programme reviews and $2.6 billion still remains undisbursed because of disagreement on the ninth review, which also delayed the completion of 10th and 11th reviews.
The government still needs to come up with a credible alternative plan, which is creating panic in markets as the rupee is trading in the range of Rs308 to Rs313 to a dollar in the open market.
However, Dar asserted that the country was not on the verge of a financial crisis and “will absolutely not default”. He stated that the country had completed all technical formalities of the ninth review.
“Unfortunately, the beginning of this review has been delayed by three months, but we have completed all prior actions,” he said. The IMF said earlier this month that there was a significant financing gap that Pakistan was required to bridge before reaching a staff-level agreement.
But the finance minister has repeatedly said that Pakistan has arranged the financing and there is also a less-than-projected current account deficit, which has further reduced the funding requirement.
