The International Monetary Fund (IMF) on Thursday announced it will send a delegation to Pakistan next week to continue discussions on the ninth review of the Extended Fund Facility (EFF), indicating the program that has been stalled since October is on a path to revival.
“At the request of the authorities, an in-person Fund mission is scheduled to visit Islamabad Jan. 31-Feb. 9 to continue the discussions under the ninth EFF review,” read a statement issued by IMF Resident Representative in Pakistan Esther Pérez Ruiz. Detailing the primary goals of the visiting delegation, she said it would focus on policies aimed at restoring domestic and external sustainability, including to strengthen the fiscal position with durable and high-quality measures while supporting the vulnerable and those affected by the floods.
In addition, read the statement, the mission would also discuss policies to “restore the viability of the power sector and reverse the continued accumulation of circular debt; and re-establish the proper functioning of the foreign exchange market, allowing the exchange rate to clear the FX shortage.”
Stronger policy efforts and reforms, the statement continued, were critical to reducing the current elevated uncertainty that weighs on the outlook, strengthening Pakistan’s resilience, and obtaining financing support from official partners and the markets that are vital for the country’s sustainable development.
Confirmation of the IMF’s visit followed the government ending an unofficial cap on the rupee in the interbank market and allowing its value to be market-determined. On Thursday, the rupee saw a 9.61 percent depreciation as the cap was lifted. At the same time, the country has record-low reserves, barely sufficient for three weeks of imports, leaving it with no option but to revive the IMF program to attract much-needed inflows and avert a default.
On Wednesday, addressing an event in Islamabad, Prime Minister Shehbaz Sharif reiterated that the government was committed to completing the IMF program, stressing that it did not want any further delays to the negotiations. However, it has been clear that the government is struggling to fulfill the global lender’s conditions, fearing public backlash over the inflationary pressures they will inflict during an election year.