In last-ditch efforts, PM asks IMF chief to revive bailout programme

• PM Shehbaz directs Ministry of Finance to prepare budget with IMF.
• Pakistan faces about $22bn of external debt service for FY24.
• IMF wants to bridge gap between rupee-dollar rates.

ISLAMABAD: Prime Minister Shehbaz Sharif has contacted International Monetary Fund (IMF) Managing Director Kristalina Georgieva, requesting her to help Pakistan revive the stalled $6.5 billion facility, Geo News reported Tuesday citing sources.

PM Shehbaz — according to the sources — contacted the IMF chief on May 27 requesting her to intervene in order to complete the pending ninth review — which would unlock $1.1 billion in financing for the cash-strapped nation.

Pakistan faces about $22 billion of external debt service for the fiscal year 2024, which begins in July, according to Columbia Threadneedle Investments, which is about five times its reserves. Consequently, the coalition government is stepping up efforts to secure funding as it teeters on the edge of a sovereign default. 

The coalition government has been negotiating with the Washington-based lender to revive its bailout programme since November, with the financing gap among the biggest roadblocks. There’s about $2.7 billion left to disburse from the $6.5 billion programme that’s scheduled to expire next month.

While the conditions regarding external financing remain in place, the premier has nonetheless directed the Ministry of Finance to prepare the federal budget for the fiscal year 2023-24 along with the IMF.

It was learnt that the lender wants to bridge the gap between the rupee-dollar rate in the interbank and open market.

A day earlier, Nathan Porter, IMF mission chief for Pakistan, said: “IMF staff continues the engagement with the Pakistani authorities to pave the way for a board meeting before the current program expires in end-June.”

Authorities are focusing on the restoration of proper foreign-exchange market functioning, the passage of the fiscal year 2023-24 budget consistent with program goals and adequate financing, he said.

On Sunday, Finance Minister Ishaq Dar said Pakistan will share its budget details with the fund. He added that he would like the IMF to clear its ninth review before the budget, which is due to be presented in early June, as all the conditions for that had already been met.

"They have asked for some more things again, we are ready to give that too, they say that give us budget details, we will give it to them," Dar said in an interview with Geo News.

Regarding the next reviews, he said it would not work for Pakistan if the IMF combined the ninth and tenth reviews of the bailout, adding, "We will not do it, (we) see this is (as) unfair."