ISLAMABAD: Pakistan has apparently been on the verge of signing the long-awaited staff-level agreement with the International Monetary Fund (IMF) for several weeks now, but in the coming week the finance minister may “close the deal”, sources in the finance ministry told Dawn.
The government has stuck to its “very soon” line and a finance ministry official said Finance Minister Ishaq Dar would resume the final round of talks with the lender tomorrow (Monday).
Earlier this week, Mr Dar said the government would sign a staff-level agreement with the foundation in a few days.
The finance ministry official said the agreement could not be signed this weekend due to delays in compliance with certain measures by the State Bank of Pakistan (SBP).
Islamabad hosted an IMF mission in early February to negotiate the terms of a deal, including the adoption of policy measures to manage its fiscal deficit ahead of the annual budget due around June.
Finance ministry official says last past actions taken by SBP, compliance reports are shared with lender
Since then, Mr Dar has consistently said the deal would be signed soon. On Thursday, he said the country was “very close” to signing the accord at staff level.
However, the official said the central bank had now completed the final preliminary actions and its compliance reports were subsequently shared with the IMF.
Meanwhile, all previous measures to be taken by the Finance and Power Ministries and the Federal Board of Revenue (FBR) were also finalized and shared with IMF officials.
The official said Mr Dar would now hold virtual talks with the IMF team, led by its chief of mission in Pakistan, Nathan Porter, to finalize the deal.
“We have almost completed all previous actions and measures proposed by the IMF,” the official said, adding that the staff-level agreement was expected on Monday or Tuesday.
A deal would release $1.1 billion, which is part of a $6.5 billion bailout the IMF approved in 2019, which analysts say is critical if Pakistan is to avoid defaulting on external debt obligations.
SBP’s foreign exchange reserves, after falling below 3 billion $, has now reached 4.3 billion. dollars, after an inflow of around 1.5 billion dollar during the last week and a half.
According to the official, the delay in signing the key IMF agreement had created uncertainty, especially among importers, as the agreement is expected to help the rupee gain Rs10-15 against the dollar.
The rupee closed at 280.77 against the US currency on Friday.
The Federal Board of Revenue also believes that import duty collection would improve once the containers stuck at the ports were cleared.
Published in Dawn, 12 March 2023