Former finance minister Miftah Ismail has said that Pakistan will have to enter another IMF deal as soon as the current, possible one concludes in June this year, owing to the depleting foreign exchange reserves.
The senior PML-N leader and financial expert made the remarks during an interview with DawnNews.
“When this [programme] ends in June, we will probably not have much more than $10 billion in reserves, if that,” Miftah observed.
“That would be about a month and a half of import cover,” he said, adding that the country will have to seek loans from the World Bank and the Asian Development Bank, requiring another IMF programme.
Owing to the debt repayment requirements — about $20bn for the foreseeable future — Pakistan will have to opt for ‘back-to-back’ IMF deals, the former finance minister maintained.
Miftah, however, called the Fund a “lender of last resort”, and said, “Once we start living within our means, once we start pursuing rational and intelligent economic policies, then we can avoid going to the IMF.”
It was reported a day earlier that a staff level agreement with IMF is yet to be reached, which indicated a deadlock in the crucial 9th Review talks amidst a critical financial crisis in the country.
Read a detailed analysis on the debt restructuring post-IMF here
Finance Minister Ishaq Dar is expected to address a presser sometime soon to announce a breakthrough in the dialogue.
Further, Prime Minister Shehbaz Sharif was reported to have approved the terms of the agreement. The IMF team visited PM House where they spoke with the premier, who is in Lahore, via video link.
The ongoing talks are related to the completion of the ninth review of a $7 billion loan programme.
The IMF put forth tough conditions as expected, but the Pakistani side was well-prepared, analysts say.
Economist Asad Butt told Khabar Say Aagay host Raza Rumi that the Fund wants Pakistan to cut subsidies and reduce expenditure. The lender is skeptical about commercial loans, and wants them excluded from the agenda. He termed the reforms to curtailing bureaucratic expenditure a major challenge for the policymakers.
Another economic expert, Niaz Murtaza observed that the economic crisis needs a ‘surgery’. “Success of talks with the IMF will open the doors for financial aid from China and Saudi Arabia, too.”