IMF open to talking with a caretaker govt; Moody’s says pact ‘credit positive’

The International Monetary Fund has reportedly agreed to engage with a possible caretaker government in Pakistan, while Moody’s Investor Service has declared the recent agreement with the monetary fund as ‘credit positive’.

According to media reports, the credit rating agency has questioned whether the government could continue to raise oil taxes and power rates in the lead-up to the general elections in 2023.

Moody’s has said that the agreement was ‘credit positive’ as it opens the path for the release of $1.2 billion in IMF loans at a time when the country’s foreign exchange reserves are under substantial strain.

It added that additional money from other global and bilateral partners will probably become available as a result.

But it also cautioned that Pakistan’s capacity to complete the existing program and maintain a credible policy course that supports further finance is still questionable, at the same time as rising inflation and a greater cost of living are increasing social and political dangers.

Political unrest is once again on the rise in the nation as a result of the PTI’s success in the Punjab by-elections and rumors that the PML-N leadership is considering calling an early election persist.

A local media group while citing sources in the Finance Ministry said that the International Monetary Fund (IMF) is ready for discussions with the caretaker establishment such happens in Pakistan.

In addition to expecting Pakistan to maintain its engagement with the IMF, which would catalyze financing from other external sources as it focuses on policy priorities identified by IMF, such as implementing the fiscal 2023 budget, making progress on power sector reforms, lowering inflation, reducing poverty, improving governance, and mitigating climate change, Moody’s predicted that “the IMF Executive Board will approve the $1.2bn disbursement in the third quarter of this year”.

According to the agency, Pakistan should be able to fulfill its future financial demands from outside sources.