Govt may do without IMF lifeline, to approach IMF ‘immediately after budget’ for new programme
The Shehbaz-led government has decided to move ahead with the annual budget preparations without taking any dictation from the International Monetary Fund, sources said on Thursday, as Prime Minister Shehbaz Sharif directed the finance ministry to ensure maximum relief to the masses.
In a major development that could lead to long-term economic and political consequences not only at the domestic but also at the international level, the government has decided to end the current IMF programme without completing it. The current programme is going to end on June 30.
Meanwhile, Pakistan has decided to negotiate a new programme with the International Monetary Fund immediately after the budget as the coalition government is planning to conclude the $6.5 billion Extended Fund Facility without completing all the pending reviews.
The government has been negotiating with the Washington-based lender to revive its bailout programme since November, with the financing gap among the biggest roadblocks. There’s about $2.5 billion left to disburse from the $6.5 billion programme that’s scheduled to expire on June 30.
The sources said that while negotiations on the ninth review were almost complete, a staff-level agreement is yet to be reached. Even after this review completes, the 10th and 11th reviews will remain pending.
“Completion of both reviews before June 30 seems impossible and the government has decided against seeking an extension,” the sources said, adding that Ishaq Dar-led Ministry of Finance will approach the Fund for a new programme after budget which is expected to be tabled on June 9.
The sources further revealed that if the coalition government fails to complete the negotiations before its term ends in August, the caretaker government will hold talks with the Washington-based lender.
Disclosing some of the details of the new programme, the sources said that the economic team has begun working on the agreement “which is expected to be tougher” than the existing programme agreed in 2019 by the Pakistan Tehreek-e-Insaf government.
Moreover, they said that the new bailout programme will likely be for more than three years. “Pakistan will desperately need an IMF programme in September as the country needs to pay around $9-11 billion dollars in repayments of external debt by December 2023,” they added.
