The International Monetary Fund (IMF) is analyzing Pakistan’s fiscal situation even though time is running short, particularly in light of the flood-related expenses that it believes have altered the macroeconomic assumptions of the fund program.
The Ministry of Finance responded to a media question about the delay in the 9th review by stating that the IMF understands the floods have changed the macroeconomic assumptions on which the program was designed; therefore, detailed analysis is being carried out by their team using the data provided.
The discussions at the policy level have not yet been resolved, despite the finance ministry’s statement that “the IMF team is anticipated to visit Islamabad soon to complete the 9th review.”
According to the standard procedure, the fund staff mission must come to an understanding with the appropriate authorities for the implementation of the program and it takes at least a week for the board members to hold a meeting based on the staff agreement.
The IMF executive board wouldn’t be available until the first week of January if there was another delay.
The central bank authorities have started restricting dollar releases, including for necessities like oil and petroleum products as a result of Pakistan’s severely low foreign exchange reserves.
The government released a revised fiscal framework last week, and the fund showed close to Rs1 trillion in slippages for the current fiscal year, including over Rs 900 billion in higher-than-anticipated interest payments along with future income shortfalls.
The policy level talks were originally slated to begin the last week of October, were moved to November 3, and then were postponed again due to discrepancies in the two party’s estimates.