ISLAMABAD: Caretaker Prime Minister Anwaar-ul-Haq Kakar met International Monetary Fund (IMF) managing director, Kristalina Georgieva, in New York on Thursday and briefed her on measures taken to stabilize and revive the economy.
Pakistan and the IMF struck a staff-level agreement for the provision of $3 billion in bailout funds under a stand-by arrangement (SBA) in June. The agreement helped Pakistan avoid default but came with tough conditions and fiscal reforms, including a petroleum levy of up to 50 rupees a liter, alongside a string of painful measures such as raising extra revenues, increasing energy prices and a market-based exchange rate, which has already fueled inflation. CPI rose to a record 38.0 percent in May. Interest rates have also risen, and the rupee hit all-time lows.
Last month the currency fell 6.2 percent. To make matters worse, Pakistan last Friday also announced a record rise in petrol and diesel prices, the second big increase in two weeks, while the inflation rate stayed above target at 27.4 percent in August.
“The Prime Minister expressed gratitude for the IMF’s approval of a $ 3 billion Stand-By Agreement (SBA) to support Pakistan’s economy,” Kakar’s office said in a statement about his meeting with Georgieva on the sidelines of the 78th session of the UNGA.
“He briefed the MD IMF on various measures taken by the Government of Pakistan to stabilize and revive the country’s economy. The Prime Minister affirmed that these initiatives aim to create a stable and conducive environment for sustainable economic growth and investment. Additionally, a strong focus had been placed on protecting the vulnerable segments of society.”
Georgieva appreciated Pakistan’s efforts at implementing policies and reforms to revive its economy and assured Kakar that the IMF remained committed to continued engagement with Pakistan.
Despite the larger than expected IMF bailout, the agreement stressed that Pakistan will have to continue to mobilize multilateral and bilateral financial support.
Pakistan needs $22 billion to fund its external payment obligations, including international debt servicing, in the financial year 2024, that starts on Saturday, July 1, and ends on June 30, 2024.