Islamabad: The forex reserves of Pakistan plunged to the precarious level of just below $3 billion, with the International Monetary Fund (IMF) returning without signing a staff-level agreement (SLA) with the government of Pakistan.
According to data shared by the State Bank of Pakistan, during the week that ended on February 3, 2023, the SBP-held forex reserves fell sharply by more than $169.5 million to reach $2.916 billion. Similarly, those held by commercial banks also dropped by more than $32.6 million to clock in at $5.655 billion.
Cumulatively, the net reserves plunged $202.1 million to settle at $8.539 billion during the period under review.
Total liquid foreign #reserves held by the country stood at US$ 8.54 billion as of February 03, 2023.
For details https://t.co/WpSgomnd3v pic.twitter.com/N0U4kelczs— SBP (@StateBank_Pak) February 9, 2023
During the last 10 days, Pakistan and the IMF mission were locked in negotiation for the resumption of the Extended Fund Facility (EFF) program with the global lender. The successful negotiations between the two would have seen Pakistan receive $1.18 billion from the Fund under the ninth review of the program.
However, on Thursday night, the staff-level talks ended without the two sides signing the SLA.
In a statement, Nathan Porter, IMF’s mission chief, noted that considerable progress was made during the talks between the two sides on policy measures to address domestic and external imbalances.
FinMin Ishaq Dar confirms receiving MEFP from IMF; terms conclusion ‘positive’
The global lender also welcomed Prime Minister Shehbaz Sharif’s commitment to implement policies needed to safeguard macroeconomic stability and thanked the authorities for the constructive discussions.
The IMF mission chief said that the “virtual discussions” will continue between the two sides in the coming days to finalize the “implementation details” of these policies.
FinMin Ishaq Dar confirms receiving MEFP from IMF; terms conclusion ‘positive’
Following the statement, Finance Minister Ishaq Dar on Friday confirmed that the Pakistani government had received the Memorandum of Economic and Financial Policies (MEFP) from the International Monetary Fund (IMF), as the staff-level talks concluded “positively”, according to the financial czar.
Addressing a press conference in the federal capital on Friday, after the IMF mission left Pakistan without signing a staff-level agreement, Ishaq Dar said that the parleys with the global lender ended “positively” and the government will have to impose Rs170 billion in taxes through a mini-budget to revive the loan program.
The finance minister said that the 10-day-long discussions were extensive covering the power, and gas sectors and the fiscal and monetary side.
The finance minister announced that new taxes worth Rs170 billion will be imposed and energy sector reforms will be implemented to restore the loan facility. He also added that the government was focusing on “minimizing untargeted subsidies”.
The finance minister said that some of the reforms suggested by the IMF were in Pakistan’s favor.
Dar insisted that there was no confusion.
“We will completely go through the [MEFP] over the weekend and will hold a virtual meeting with [Fund officials]. It will obviously take a few days,” he said.
The MEFP is a key document that describes all the conditions, steps, and policy measures on the basis of which the two sides declare the staff-level agreement.
