It was two crucial issues that delayed the handover of the Memorandum for Economic and Financial Policies (MEFP) between Pakistan and the International Monetary Fund (IMF) on Wednesday – credibility of government assurances and reliability of foreign loans.
In order to break the deadlock, Finance Minister Ishaq Dar met behind closed doors at PM House, away from the media glare. PM House was used instead of the finance ministry for the meeting.
In spite of the interaction, Pakistan could not convince the mission chief to share the draft MEFP, which would have given it an idea of what the IMF thought about Pakistani presentations.
The meeting between the finance minister and the IMF mission chief “was good and assurances (were) exchanged”, according to a senior official. But no government official was sure that Pakistan would be able to get the MEFP today (Thursday) and sign it the same day. There was still a dim hope to get the document.
According to highly placed government sources, China, Saudi Arabia, and the United Arab Emirates (UAE) need to bridge a $4 billion external financing gap by June.
It was the IMF asking Pakistan to take on these nations.
It is essential to fund the IMF programme, but no convincing plan has emerged that would ensure at least $7 billion in debt repayment, money to finance the current account deficit, and adequate foreign exchange reserves, according to a participant in negotiations with the IMF.
According to the sources, there was also disagreement over net international reserves.
Hamed Yaqoob Sheikh, Secretary Finance, who is the key interlocutor in the talks, said the mission chief briefed the finance minister about the talks and the mission is working on putting it all together.
Continuing discussions with the IMF on Wednesday focussed on the fiscal table and financing, the finance secretary said, adding that there was broad consensus on reform measures.
READ MORE: Sherwani for Baraat looks dapper on Shadab Khan
According to Dr Aisha Ghaus Pasha, Minister of State for Finance, the IMF will share the draft of MEFP only after it clarifies a few things.
In the end, she said, the government could not increase power tariffs beyond a certain point.
“We are very near to finalising the negotiations,” said Pasha a day before the talks are scheduled to end but the country still does not have the first glimpse of the key policy document.
Even if the IMF hands over the MEFP today (Thursday), it will require a great deal of effort to go through each and every figure and paragraph of supposedly a voluminous report and then commit to it the same day. In case of haste, the government may end up signing a deal that it will not be able to deliver two months down the line.
In some cases, there may be some preconditions set by the IMF before it will be able to convene its board meeting, even if an agreement has been reached at the staff level before the departure date.
In addition to this, the IMF kept constantly reminding Pakistan about the past unfulfilled commitments that had been made in the past, which they said was another issue with Pakistan’s credibility when it came to their promises.
According to a negotiator who requested anonymity, “the IMF is not trusting our words, even though we are ready to commit to what they are asking for.”.
Despite reports of mishandling of the IMF talks appearing to be a regular feature, the sources say that the minister of state for petroleum kept the IMF mission chief waiting for about an hour during one of the meetings this week, according to the sources. Musadiq Malik was not available for any comments at the time of publication.
The sources said that some of the issues related to the gas and power sectors were still outstanding, and were hoped to have been resolved by the end of the week.
