By Gibran Naiyyar Peshimam
KARACHI, Pakistan (Reuters) -An International Monetary Fund mission will visit Pakistan later this month to discuss the stalled ninth review of the country’s current funding programme, the lender’s resident representative said on Thursday, with the cash-strapped nation’s economy in turmoil.
Pakistan secured a $6 billion IMF bailout in 2019, which was topped up with another $1 billion last year, but the lender then stalled disbursements in November due to Pakistan’s failure to make more progress on fiscal consolidation and economic reforms.
“At the request of the authorities, an in-person Fund mission is scheduled to visit Islamabad January 31st – February 9th to continue the discussions under the ninth EFF review,” Esther Perez Ruiz said in a message to Reuters.
A successful visit is critical for Pakistan, which is facing an increasingly acute balance of payments crisis and is desperate to secure external financing, with less than three weeks’ worth of import cover in its foreign exchange reserves.
Multilateral and bilateral financing pledges for Pakistan’s effort to rebuild after devastating floods last year are also tied to the country getting the green light from the IMF.
Ruiz said the mission will focus on policies aimed at restoring domestic and external sustainability, including to strengthen the fiscal position while supporting those affected by the floods, as well as power sector reforms.
It will also look to discuss re-establishing a market-based mechanism to determine the value of the Pakistani rupee, she said. Such a mechanism is a key prior action for the country to receive IMF support, but which it had fallen short of until this week.
In just two days, the Pakistani rupee has lost close to 10%of its value after the removal of price caps imposed by the government but which the IMF opposed.
Ruiz said stronger policy efforts and reforms are critical to reduce the high level of uncertainty weighing on Pakistan’s outlook and for it to obtain financing support from official partners and the markets.
Market watchers said that the sudden removal of the price caps were an attempt to restart the IMF programme.
(Reporting by Gibran Peshimam; Editing by Hugh Lawson)