US to help Pakistan revive IMF deal

ISLAMABAD: The United States has agreed to help Pakistan negotiate a deal with the International Monetary Fund (IMF) amidst unprecedented economic instability in the country, reported local media, citing diplomatic sources. In order to muster international aid for the looming economic crisis in the country under the new Shehbaz Sharif government, Islamabad is seeking Washington's support to revive its Extended Fund Facility (EFF) with the IMF.

Being the largest stakeholder of the IMF, the US exercises considerable influence over the global lender's daily operations and is expected to catalyse the process. As per reports by the Dawn newspaper, Pakistan signed a 39-month USD 6 billion EFF in July 2019, but IMF halted the process of roughly USD 3 billion after the previous Imran Khan-led Pakistan Tehreek-e-Insaf (PTI) government backed out of its commitments.

Currently, Islamabad is not only requesting for the disbursements to revive, but is also asking for the expansion of the program's size and duration.

As per another report by the Dawn publication, a top Finance Ministry official confirmed on Sunday night that they had not yet received the first draft of the memorandum of economic and financial policies (MEFP) from the IMF because certain matters still remain unsettled. "Without broader agreement on the basis of framework, no one could help Pakistan," Geo News quoted the official as saying. To convince the Fund to revive the program, the government has adopted the toughest of measures to end fuel subsidies and has hiked the fuel prices to new highs. Despite Islamabad having become a "desperate borrower" due to the depletion of foreign currency reserves, the IMF continues to insist on providing more, reported Geo News.

As per local media reports, the government is targeting to get the budget approved by the National Assembly by June 27-28. To do so, it must reach an agreement with the IMF to safeguard the agreed-upon measures in the budget. In any scenario, parliament must adopt the budget by July 28 to enable its legal execution with effect from July 1, as mandated by the Constitution.