IMF Says Pakistan’s Economic Program Is Still Being Discussed

(Bloomberg) -- Pakistan and the International Monetary Fund will discuss aspects of the country’s economic program, but it’s too soon to decide the size of the possible loan, a senior IMF official said.

An IMF “technical team” is visiting Islamabad from Monday to discuss what will be the fund’s 13th bailout for Pakistan since the late 1980s, Jihad Azour, the fund’s head of Middle East and Central Asia department, told Bloomberg Television in an interview in Dubai. The talks, which were close to being sealed as per Pakistan authorities, have been extended twice since November.

It’s too “early to put a number on the size” of possible loan program to Pakistan, Azour said. “We’re still discussing what are the features of the reform package that Pakistan is developing, what will be the budget they would be putting forward.”

IMF Says Pakistan’s Economic Program Is Still Being Discussed

"These comments suggest that there’s some way to go in the negotiation of an IMF loan,”
said Hasnain Malik, the Dubai-based head of equity strategy at Tellimer. “The IMF needs to see as much evidence as possible on the commitment to structural reform, like tax collection and addressing loss-making state enterprises, given the failure to deliver on this in all previous programs."

A delay in reaching an agreement triggered a rout in the nation’s currency while local stocks fell to the to the lowest level in three years this month. Pakistan’s credit score was downgraded by S&P Global Ratings citing a deterioration in the economic outlook.

Abdul Hafeez Shaikh, who was this month named Pakistan’s finance adviser after the resignation of Asad Umar as finance minister, has said he has spoken with IMF officials and pledged to accelerate reforms to complete the deal.

Depleted Treasury

The two parties agreed in principle to a deal earlier this month after meetings in Washington, according to Hammad Azhar, state minister for revenue. Since coming to power in August, Prime Minister Imran Khan’s government has faced a balance-of-payments crisis and a depleted treasury.

The rupee was little changed today at 141.396 per dollar while the benchmark KSE-100 Index snapped a three-day rally dropping 0.3 percent at close.

A deal would boost markets in the short-term, though the longer-term outlook is more uncertain, according to Mohammed Ali Hussain, head of research at FIM Partners in Dubai.

“You could see a short-term relief rally,’’ Hussain said. “But the key for foreign investors like me is a long-term solution that comes through structural reforms. Pakistan is the market we are spending the most time on, anytime the inflection point can be reached.’’

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