The deadlock between the federal government and the IMF on the revival of the $6 billion Extended Fund Facility continues as the second round of negotiations regarding the new draft of the State Bank of Pakistan (Amendment) Bill, 2021, ends inconclusively.
The meeting was held on Tuesday between the Law Minister, Dr. Farogh Naseem, and the International Monetary Fund mission chief for Pakistan, Ernesto Ramirez Rigo. The federal government sought to retain the power of setting policy directions and inflation targets for SBP.
The initial draft also did not address the issue of setting inflation targets. Further, the government also wanted to keep their finance secretary on the SBP’s board for being the majority shareholders of the central bank.
The government has now compiled its final position in the context of the conversations with the IMF mission, the constitutional requirements, and the current legal environment.
“The position will be shared with the IMF mission chief, and on the basis of it, a final meeting on the subject of the SBP bill will take place soon,” stated the finance ministry on Wednesday.
According to a report by Express Tribune, the IMF mission chief cannot offer much flexibility as the IMF board would seek execution of the loan terms agreed upon during the program’s fifth review. The authorities in question evaluated December 22 and January 14, 2022, as potential dates for the board meeting, subject to the implementation of the previous actions.
“The IMF team and the Pakistani authorities remain engaged and are conducting discussions on the set of policies and reforms needed to complete the 6th review under EFF,” said the Resident Representative of the IMF, Teresa Dabán Sanchez, confirming the impasse on the SBP bill between the IMF and the government.
If the ongoing standstill continues, it will become difficult for the federal government to complete the 6th policy review.
