After months-long hectic efforts, the International Monetary Fund (IMF) executive board Monday approved the seventh and eighth review of the stalled $6 billion Pakistan programme, announced Finance Minister Miftah Ismail.
Finance Minister Miftah Ismail announced the development
on his Twitter handle saying: “Alhamdolillah the IMF board has approved the
revival of our EFF programme. We should now be getting the seventh and eighth
tranche of $1.17 billion.”
The finance minister also thanked Prime Minister Shehbaz
Sharif "for taking so many tough decisions and saving Pakistan from the
default".
"I
congratulate the nation,” said the finance minister.
Pakistan entered the programme with the
Fund in 2019, however, Islamabad struggled to keep targets on track due to
which only half the funds had been disbursed.
The
cash-strapped nation received that last disbursement in February and the next
tranche was to follow after review in March, but the government of ousted prime
minister Imran Khan slashed the petroleum prices by massively giving subsidies
to the nation which threw fiscal targets and the programme off track.
However, after months-long efforts of the
coalition government — that came into power in April — Pakistan reached the
staff-level agreement with the Washington-based lender in July after completing
all prior conditions. The executive board today reviewed the progress and
decided to resume the programme and approved the seventh and eighth loan
tranches.
Pakistan is
now likely to receive a $1.17 billion loan tranche from Fund within six days.
However, the global lender has not
confirmed the development yet.
Struggle to clinch IMF deal
The uncertainty surrounding the IMF
programme has been taking a toll on the economy of Pakistan as the financial
markets have been awaiting the final decision for the last several months.
While the previous PTI-led government
breached the conditions agreed with the Fund to provide relief to the nation;
the coalition government took a “tough decision” to convince the board to
resume the stalled programme.
However, the intense political atmosphere
of Pakistan kept the uncertainty regarding the Extended Fund Facility (EFF)
programme’s revival hanging on the leadership and markets.
Last week, just days before the scheduled
executive board meeting. The PTI-led Khyber Pakhtunkhwa government allegedly
refused to implement the terms of the IMF agreement in a letter as part of “a
ploy to plunge Pakistan into a flood of economic crisis”.
In a letter written to Miftah, Provincial
Finance Minister Taimur Khan Jhagra said that the KP administration might find
it difficult to run a provincial surplus this year in view of flood-related
damages.
It should be noted that ensuring surpluses
by provinces this fiscal year is a key requirement previously agreed upon to
revive the IMF programme.
The coalition government was once again
worried after the development as it might have jeopardised Islamabad’s position
during the executive board’s meeting. The ruling parties also criticised the
Khyber Pakhtunkhwa government for “playing politics” after it allegedly refused
to implement the terms of the IMF agreement in a letter as part of “a ploy to
plunge Pakistan into a flood of economic crisis”.
Later, it
was learnt that former minister Shaukat Tarin allegedly asked Punjab and Khyber
Pakhtunkhwa to withdraw from the International IMF deal.
The revelations came to the fore in an audio leak earlier today where the
ex-finance minister could be heard directing Punjab Finance Minister Mohsin
Leghari and Jhagra to cite recent floods as a core reason for withdrawing from
the deal.
After the
IMF board took its decision, Planning Minister Ahsan Iqbal said that the global
lender has approved the programme despite PTI's treacherous act.