Pakistan has come closer to reaching an agreement with the IMF, Finance Minister Asad Umar said Monday.
“This will be our last agreement with the IMF,” the minister said while speaking to the media in Peshawar.
Pakistan is in talks with the IMF for a loan package to shore up its dollar reserves so it can repay foreign debt and continue paying for essential imports such as oil, machinery and raw material that keep the economy going.
However, the IMF demands, among other things, that the federal government cut its budget deficit (loss).
The Centre’s deficit is more than Rs2 trillion because it spends more than it earns. Among its biggest expenditures are loan repayments and security costs. About 60% of the federal government’s budget goes to defence and repayment of previous loans.
The federal government can’t do much about debt servicing and defence, so it is trying to increase revenue to reduce its losses (deficit).
Asad Umar said that the differences between Pakistan and the IMF over a possible bailout package have decreased. “IMF has changed its position.”
His remarks came a day after Prime Minister Imran Khan held a meeting with IMF Managing Director Christine Lagarde in Dubai. The two met on the sidelines of the World Government Summit.
During the meeting, the prime minister appreciated the IMF’s support to Pakistan and shared his vision for nation-building. He reiterated the government’s commitment to undertaking structural and governance reforms and strengthening social protection in the country, according to a press release by the Ministry of Finance.
Lagarde acknowledged the steps taken so far by Pakistan to stabilise its economy. She said the IMF will remain engaged in supporting Pakistan in sustaining its economic recovery.
The two sides agreed to work together on policy priorities and reforms aimed at reducing imbalances and laying the foundations of a job-creating growth path in Pakistan.