IMF team likely to visit Pakistan after formation of new govt to discuss medium-term bailout package

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Islamabad: A delegation of the IMF may visit cash-strapped Pakistan once a new federal government is formed, negotiations for which are ongoing between major political parties after the general elections threw a hung Parliament, a media report said on Monday. The International Monetary Fund's review mission might visit Islamabad by the end of this month or early next month, provided the government formation at federal and provincial levels was complete, according to the Ministry of Finance’s assessment, Geo News reported.

The visit assumes significance as it is crucial for the completion of the USD 3 billion Standby Arrangement (SBA), which is going to expire on April 12. The mission will finalise the salient features of the anticipated medium-term bailout package to avert a default on repayment of foreign debts, the report said.

In its recent staff report, the IMF talked about rephasing access for the second review, to March 15, 2024, to provide sufficient time to complete the programme’s structural agenda.

However, in the wake of controversy over the poll results, the mission’s possible delay for the completion of the second review and release of the last tranche worth USD 1.2 billion under SBA could lead to fears of default, the report said.

Pakistan’s foreign exchange reserves hovered around USD 8.04 billion during the week ending February 2, after witnessing a decline in reserves by USD 173 million due to external debt repayments.

A Finance Division official said the IMF would only come to begin the second review talks once a new government was sworn in at the national level, according to the report.

The official added the last and third tranche of USD 1.2 billion was conditional upon the newly elected government assuming office. The new agreement will also be finalised with the new government, he said.

Earlier, the IMF’s review mission was scheduled to visit the country in the first week of February, but the delegation refused to visit on the eve of the general elections.

After the general elections threw a fractured mandate, doubts have been raised about the fairness of the whole process, with the US, the European Union, and other countries demanding an investigation into the irregularities and fraud allegations.

The Election Commission of Pakistan (ECP) has announced the results of 264 out of 265 contested seats, with independents, a majority of them backed by jailed former prime minister Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) party, securing 101 seats in the National Assembly.

They were followed by three-time former prime minister Nawaz Sharif's Pakistan Muslim League-Nawaz (PML-N) with 75 seats, the Pakistan Peoples Party of ex-foreign minister Bilawal Zardari-Bhutto got 54 seats, and the Karachi-based Muttahida Qaumi Movement Pakistan (MQM-P) got 17 seats. Other smaller parties won the rest of the 12 seats.

To form a government, a party must win 133 seats out of 265 contested seats in the National Assembly.