The International Monetary Fund (IMF) remains engaged with Pakistan on securing funding and policy assurances with the goal of reaching an agreement on the 9th review of the $6.7 billion loan agreed in 2019, the lender’s spokesperson told Bloomberg earlier today.
The crisis lender sees no indication that Pakistan wants to pause negotiations on disbursement from the current program. Interestingly, Islamabad has committed not to introduce its fuel cross-subsidy scheme in the fiscal year 2023-24 and beyond, the agency’s spokesperson said in an emailed response.
The Fund has declined to comment on the arrest of former Prime Minister Imran Khan.
This comes after Minister of State for Petroleum Musadik Malik said on Tuesday that the government aims to first address the IMF’s concerns before implementing its new fuel subsidy plan. “We want to make sure now that if we move forward, we take care of their (IMF’s) concerns and make sure that they completely understand what we are trying to do and why,” he said.
Fuel pricing has been a sticking point for negotiations between the IMF and Pakistan over the next installment of a 2019 aid program, which has stalled since August 2022.
The lender’s remarks today offset bears that awakened due to an earlier Bloomberg report which said Pakistan could default in the absence of fresh funding support. It bears mentioning that the country’s heavy debt amortization against precarious reserves suggests default is imminent.
The IMF has about $2.6 billion remaining to disburse, with the program expiring at the end of June 2023.
Meanwhile, dollar bonds due 2031 rose from the lowest since November on Thursday and were indicated at 33.44 cents on the dollar.
With protesters on the streets since Tuesday, it is possible that the IMF might be more wary about restarting the bailout program if the situation persists. While distorted politics causing volatility was not uncommon for Pakistan and its investors, it could complicate talks with the lender.
