ISLAMABAD, PAKISTAN – Because of significant debt repayments, Pakistan’s official foreign exchange reserves have fallen to a perilous level of $4.5 billion. As a result, Prime Minister of Pakistan Shehbaz Sharif has asked the International Monetary Fund (IMF) to reviewing the loan’s next tranche of negotiations.
The prime minister of Pakistan also acknowledged a report that he had a phone chat with IMF Managing Director Kristalina Georgieva on Thursday.
He referred to his phone call with Georgieva from the previous day and said, “I urged her to deploy an IMF team for the completion of the pending 9th review of the programme so that the next loan tranche is issued.” “She reaffirmed that [Pakistan] will be visited by the expedition within the following two to three days.”
However, according to sources in the finance ministry, no dates for the IMF review mission have been decided upon yet.
Along with Prime Minister Shehbaz, Finance Minister Ishaq Dar would travel to Geneva to meet IMF representatives outside of a meeting.
Due to the lack of interest from significant parties, the conference was downgraded to a climate resilience event from a donors’ conference.
The premier’s direct involvement in the IMF programme discussions raises the concerns that the finance ministry has lost control of the situation which reflected badly on Pakistan’s foreign exchange reserves.
A $1.1 billion loan tranche has been withheld because of the 9th review negotiations, which have been ongoing since October of last year. In order for the World Bank and the Asian Infrastructure Investment Bank (AIIB) to disburse their loans, Pakistan is eager to finish the ninth evaluation.
The day Pakistan serviced two further foreign commercial loans totaling $1.02 billion, PM Shehbaz revealed his conversation with the IMF’s director.
On Friday, according to government representatives, Pakistan repaid $600 million to the Emirates NBD Bank and $420 million to the Dubai Islamic Bank.
The official foreign exchange reserves have decreased to around $4.5 billion after the most recent loan repayments, which is barely enough to finance imports for 25 days.
There have been no significant inflows noted during the first week of January. The foreign exchange reserves were estimated by the central bank to be $5.6 billion as of December 30, 2022, but they have since decreased even more.
Dar stated that the funds will arrive “in days,” although Pakistan is anticipating a refinancing of $700 million from the Chinese Development Bank and a $3 billion cash infusion from Saudi Arabia.
She was reassured by PM Shehbaz that, in contrast to its predecessor, the current administration will uphold its obligations to the IMF without further burdening the populace.
Differing views on exchange rate policy have caused a delay in the review negotiations.
In order to pay off around Rs500 billion in circular debts, import restrictions, demands for the imposition of extra taxes, and price increases for energy were made.
The prime minister said that he had “sensitised” the IMF MD to the negative effects that the floods were having on the nation’s economy and made it obvious that his administration had already taxed the wealthy but was unable to burden the less fortunate any further.