(CTN News) – Finance Minister Ishaq Dar said on Friday that Pakistan and the International Monetary Fund have reached an agreement on releasing around $1.1 billion in crucial funds, adding that the payment was delayed due to “regular processes.”
Dar was addressing the media a few hours after an IMF delegation departed Islamabad after ten days of negotiations to provide the money Pakistan’s economy so sorely needs.
Since last December, payment of the money, which is a component of a $6.5 billion bailout Pakistan agreed to in 2019, has been delayed.
Dar said, “The prime minister has indicated we’re committed. “We shall put into practice whatever our teams have decided upon.”
He said, “We will work to see Pakistan complete its second IMF program in its history.
According to observers, an agreement with the IMF opens the door for other organizations and states to contribute money, which is required to keep Pakistan from defaulting on its responsibilities for foreign payments.
However, the monetary changes required by any agreement are expected to contribute to record-high inflation, which reached 27.5% year over year in January.
Dar said that the IMF negotiations, which were originally scheduled to finish on Thursday, will continue on Monday to secure a staff-level agreement that would need to be confirmed by the IMF’s headquarters in Washington before the money could be released.
Talks are still ongoing, according to a statement from Pakistan’s IMF mission chief Nathan Porter, who also noted that significant progress had already been achieved.
The $350 billion economy of the nation, which is experiencing a balance of payments crisis as its foreign currency reserves have decreased to less than three weeks’ worth of import coverage, depends on the IMF support.
Shahbaz Sharif, Pakistan’s prime minister, described the country’s economic position as “unimaginable” last week.
One IMF requirement is that Pakistan increases gasoline prices and return to a market-based currency rate.
When asked about other steps, Dar said that Pakistan would increase gasoline prices gradually, wouldn’t tax sales of petroleum goods, and was thinking about drafting a new finance law. He said nothing more in-depth.
Dar said his administration would review the fund’s reform suggestions for the energy industry.
Earlier, officials from the finance ministry had told Reuters that the government and the IMF were debating how to handle the approximately $15 billion in government debt owed by the energy industry.
According to them, Pakistan presented a plan to gradually reduce its debt via price increases and profits from gas firms, but the IMF demanded a more defined course of action.
The $6.5 billion bailout program, scheduled to finish in June, still has another $1.4 billion left in addition to the blocked tranche.
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