Last-ditch efforts to save IMF || آئی ایم ایف کو بچانے کی آخری کوشش Prior to the upcoming budget, if the SLA is not reached soon, the present programmer would not succeed.
ISLAMABAD: Both parties wouldLast-ditch attempts are currently being made to reach an agreement ahead of the forthcoming budget, but if the impasse continues over the next few days, expectations for resuming the IMF programmer will wane. need to make difficult decisions to overcome the current impasse as Pakistan’s alternatives for reviving the stalled IMF programmed diminish.
Last-ditch efforts to save IMF || آئی ایم ایف کو بچانے کی آخری کوشش. The main reason why the prospects are dwindling is that the $6.5 billion current programmer under the Extended Fund Facility (EFF) will finish on June 30, 2023. For the conclusion of the 9th Review under the EFF programmed, which became due on November 3, 2022, negotiations between Pakistan and the IMF are still ongoing. The negotiations started on January 31, 2023, and continued ineffectively until February 9, 2023. The Staff Level Agreement (SLA) has not yet been signed since that time.
The current plan will fail if the SLA is not reached in the following days prior to the incoming budget for 2023–24, which is slated to be revealed on June 9, 2023.
“There are still a few possibilities for proceeding. The first step is to sign the SLA right away and ask the IMF Executive Board to approve Pakistan’s request for the next $1 billion tranche.
The second step is to secure an extension of the EFF programmed period by a few months so that the 10th and 11th Reviews can be completed, top official In a background conversation on Sunday, insiders said.
The second alternative might involve merging the 9th and 10th Reviews and having Pakistan inform the IMF of its upcoming budgetary figures.
Following the release of the budget for 2023–24, the SLA should be signed. If approved by the parliament, the IMF Executive Board may then sanction combined tranches and extend the EFF programmed in order to complete the 11th Review by July or August 2023.
There are no simple solutions; both parties will need to develop strategies for reaching an understanding. But no breakthrough can be made with the current strategy of maintaining the status quo, the official claimed.
When contacted, Dr. Khagan Najeeb, a former adviser to the ministry of finance, stated that the country’s inability to reach a staff level agreement with the IMF may be due to a number of factors, including increased political unpredictability, subpar economic management, and a lack of sufficient external sector financing.
The IMF is now focused on new issues, such as the budget and Pakistan’s funding alternatives beyond June 2023, as a result of the delay, which first began on 3 November and continued after 10 February. These are difficult questions for a government governing an economy in a scenario resembling a crisis. Without an IMF plan, Pakistan would have few options, a high default risk, and insufficient reserves.
Adding that life without the IMF would require additional funding from friendly nations, rollovers, and commercial financing at higher costs, he said that options for striking the SLA in the coming days or combining the 9th and 10th Reviews and then asking for an extension of the programmed beyond June were still viable but were beginning to look challenging.
However, people in the know understand that this is all temporary because any temporary or new structure would require another programmer backing from the IMF because of the required $25 billion in repayment.
This would be in addition to funds for funding the current account for FY24, and without the IMF, that feels almost impossible, he said.