IMF funding to bring financial stability to Pakistan, feel experts

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international monetary fund

ISLAMABAD: Pakistani officials’ ‘positive’ meetings with the International Monetary Fund (IMF) to seek extension and expansion of the loan facility would help restore and boost investors’ confidence in the country’s economic policies and ensure financial stability, economic experts said.
However, some others do believe that to secure the loan facility with extended period and enhanced value, Pakistan will have to withdraw subsidies, which could fuel further inflation and unemployment in the country.
It is worth mentioning here that a Pakistani delegation led by Finance Minister Miftah Ismail held several meetings with the IMF officials in Washington recently. The discussions focused on pathways to complete the seventh review of the IMF programme for Pakistan.
Miftah Ismail laid out his government’s priorities and efforts to ensure fiscal discipline while insulating the vulnerable segments from oil price volatility in the international markets.
After the ‘successful’ meetings for loan agreement under the IMF’s Extended Fund Facility and the reports that the lender may increase the size and duration of the programme, Pakistani rupee, which was continuously shedding its value against the US dollar started gaining value in the inter-bank market.
The business community also sees these ‘positive’ meetings as a good sign for Pakistan’s depleting foreign exchange reserves and the overall economic outlook.
When contacted, former finance minister Dr Salman Shah told WealthPK that Pakistan had sought extension of the programme by one year and enhancement of the loan amount from $6 billion to $8 billion.
Pakistan, he said, had to accomplish the missed and slipped targets of the IMF immediately and withdraw the subsidies to secure the needed funding.
Dr Salman Shah said that as Pakistan would present its federal budget next month (June) for the fiscal year 2022-23, the government would need to enforce the IMF policies in letter and spirit to secure the loan.
The former finance minister said the government needed to curtail imports to bring down the current account deficit. He observed that increase in prices of petroleum products would lead to increase in inflation and unemployment.
Meanwhile, talking to WealthPK,
Iftikhar Ali Malik, President of South Asian Association for Regional Cooperation’s Chamber of Commerce and Industry, welcomed Finance Minister Miftah Ismail’s meetings with the IMF officials in Washington. He expressed the hope that agreements with IMF, which is a longstanding development partner of Pakistan, would put a positive impact on Pakistan’s economy and restore investors’ confidence in the government’s economic policies.
Mehar Kashif Younus, former vice-president of Lahore Chamber of Commerce and Industry, and chairman of rice exporters’ association, said the government should not compromise on harsh conditionalities of IMF, and sign agreements keeping in view of the country’s economic interests. – INP