ISLAMABAD: The Memorandum for Economic and Financial Policies (MEFP) draft was received at 9 a.m., according to Finance Minister Ishaq Dar, who spoke at a press conference on Friday in Islamabad.
Pakistan and the International Monetary Fund (IMF) failed to reach a staff-level agreement on Thursday, but they did agree to a broad framework that will be used in the coming days to satisfy the lender of last resort. This is the reason for the ministerial conference.
The staff-level agreement could not be reached on the same day because the IMF discussed the draft of the MEFP just before the review talks were scheduled to end.
Prime Minister Shehbaz Sharif and IMF Mission Chief Nathan Porter held an unexpected virtual meeting. Dar, on the other hand, maintained that the meeting was “nothing unusual.”
Dar stated that the Prime Minister had reassured the IMF of Pakistan’s determination to fulfill its sovereign obligations after ten days of extensive discussions.
He went on to say that Dar and his team had demanded that the IMF release the MEFP prior to the meeting with PM Shehbaz, stressing that it was “no abnormal matter.”
He stated, “This is the standard procedure that is adhered to in every program.”
On Monday, the Finance Minister will examine the MEFP and hold a virtual meeting with the IMF.
Pakistan’s “gradual approach” proposal has been rejected by the Fund, which says that everything needs to be done right away.
Keeping the US dollar dependent on market forces, significantly raising interest rates and electricity costs, and enacting new taxes are all widely supported.
Every agreed-upon measure would be difficult for the majority of Pakistanis because of the severity of the economic crisis.
Earlier, the government and the IMF mission had agreed on the terms of the stalled bailout package. It said Dar was supposed to hold a press conference to give details about the negotiations, but the finance minister later called off his briefing for the media because the talks fell apart.
Additionally, Dar stated earlier on Thursday that “matters will be settled today” with the IMF and that the people will soon hear “good news.” Pakistan’s foreign exchange reserves fall below $3 billion.
Since January 31, the IMF team had been in Islamabad to settle disagreements over the government’s fiscal policy, which had stalled the release of over $1 billion from the 2019 $6.5 billion bailout package.
Pakistan’s $350-billion economy is in a balance-of-payments crisis. On Thursday, the country’s foreign exchange reserves fell below $3 billion for the first time in nine years, reducing import capacity to just over two weeks. External funding is essential for the economy.
