With Pakistan’s official
foreign currency reserves slipping to a dangerous level of
$4.5 billion because of major debt repayments, Prime Minister Shahbaz Sharif has
requested the International Monetary Fund (IMF) managing director to immediately
send over a team to the country to start review negotiations for the next tranche of its loan.
While speaking at the inauguration of Hazara Electric Supply Company (HAZECO) in Islamabad,
the premier also confirmed a story of The Express Tribune that he had a telephonic
conversation with IMF Managing Director Krista Lina Georgieva on Thursday.
“I asked her to send an IMF team for the completion of the pending 9th review
of the programme so that the next loan tranche is released,” he told the
gathering while referring to his telephonic conversation with Georgieva a day earlier. “She assured that the mission will visit [Pakistan] in the next two to three days.”
However, the finance ministry sources said no dates for the IMF review mission had been finalized yet.
Finance Minister Ishaq Dar
would leave for Geneva along with
PM Shehbaz and meet IMF officials on the sidelines of a conference there. The conference has now been lowered to a climate resilience event from a donors’
conference because of lack of interest by major players.
The premier’s direct intervention
in the IMF programme talks suggests that the
matters have slipped out of the hands of the finance ministry.
The 9th review talks have been pending since October last year, resulting in the
withholding of a $1.1 billion loan tranche. Pakistan is keen to complete the 9th review so that the World Bank
and Asian Infrastructure Investment Bank (AIIB) may also release their loans.
Dar held a virtual meeting with Jinn Laquan, the president of the AIIB, requesting him to provide more loans.
disclosed his conversation with the IMF’s head the day Pakistan repa
id two more foreign commercial loans totaling $1.02 billion.
Pakistan paid back $600 million to the Emirates NBD Bank
and $420 million to the Dubai Islamic Bank on Friday, according to government officials.
After the fresh debt repayments, the official foreign exchange reserves
have dropped to about $4.5 billion — sufficient for only 25 days of import cover.
No major inflow has been reported in the first week of January. The central bank had
reported on Thursday that as of December 30, 2022, the foreign exchange reserves stood
at $5.6 billion, which have now been further depleted.
However, Pakistan is expectin
a refinancing of $700 million by the Chinese Development
Bank and $3 billion cash injection by Saudi Arabia — what Dar said would arrive “in days”.
The prime minister also disclosed that Georgieva inquired whether or not China and Saudi Arabia were supporting Pakistan.
“Because of their huge financial exposures, I would be surprised if
China and Saudi Arabia do not link their financial assistance with the IMF programmed that oversees Pakistan,”
said Haroon Sharif, a former chairman of the Board of Investment, while speaking during Express News’
show – ‘The Review’.
Haroon added that there would be a political and diplomatic cost for major financial reliance on Saudi Arabia and China.
An official handout released by the PM’s Office after his speech read
that the IMF managing director
called premier Shehbaz on the phone.
However, IMF Resident Representative Esther Perez did not reply to
a question whether the call had been requested by the global lender or Pakistan.
The official handout further stated that Georgieva had “expressed her
deep sympathy and concern on the human and material losses due to the recent floods and reiterated her
commitment to help Pakistan in this difficult period”.
“The prime minister thanked the managing director for her concern on the
fallout of the floods and extended an invitation to [her] to participate
in the Climate Resilient Pakistan Conference [in] Geneva,” it added.
However, the IMF MD did not accept the invitation to travel to Geneva.
“The managing director thanked the PM for the invitation but explained that as the
IMF Board meetings had been prefixed for 9th and 10th of January, she will only be able to join
the conference virtually,” according to the PM’s Office.
Sources said as a practice, in absence of the managing director,
the first deputy MD of the IMF chaired the board’s meetings.
The prime minister
assured Georgieva that Pakistan was committed to
successfully completing the ongoing IMF programmed and expressed his gratituhttps://zhmall.pk/de to her for “her understanding
and empathy of the challenges” that the country had been facing.
PM Shahhbaz assured her that, unlike its predecessor, the incumbent government
would abide by its commitments with the IMF without further burdening the people.
The review talks are delayed because of differences over exchange rate policies,
restrictions on imports, demand for imposition of additional taxes,
and increasing the electricity prices to settle roughly Rs500 billion in circular debts.
The prime minister said he had “sensitized” the IMF MD over the country’s economic
condition adversely affected by the floods and made it clear that his government had
already taxed the rich but could not place more burden on the poor.