The International Monetary Fund (IMF) is preparing to discuss Pakistan’s budget plans for the coming financial year as part of a process to unlock a crucial financing injection for the cash-strapped nation, the IMF’s country mission chief said. An IMF review of the budget presents a fresh hurdle before the lender approves the release of pending bailout funds, which are crucial for Pakistan to resolve an acute balance of payments crisis. A staff-level agreement to release $1.1 billion has been delayed since November. The finance ministry did not immediately respond to Reuters’ request for a comment. “In all IMF programs, the authorities issue a letter of intent associated with the last review outlining their policy intentions for the period after the program,” Nathan Porter, IMF mission chief to Pakistan, told Reuters on Thursday.
Pakistan has struggled to strike a deal with the IMF to release funds critical to stabilise the struggling economy. Economist Sakib Sherani of Macroeconomic Insights said the IMF wants to ensure that the government remains committed to the agreed path of fiscal consolidation as the country prepares for elections later this year. “Historically, the biggest fiscal slippages in Pakistan occur in an election year,” Sherani said. It was not immediately clear if the review of the budget would affect the pending ninth review, or would be part of the two reviews that remain after this.
