Finance Minister Mohammad Aurangzeb Confirms Upcoming IMF Talks

Pakistan’s newly appointed Finance Minister, Mohammad Aurangzeb, has confirmed that the country is set to begin crucial talks with the International Monetary Fund (IMF) under the $3 billion Stand-By Arrangement (SBA) this week. The government will formally request the IMF to send its mission to Islamabad for discussions and the release of the last tranche worth $1.1 billion.

Aurangzeb, who was sworn in as Finance Minister recently, stated that the government hopes to start discussions with the IMF this week. The government of Pakistan will send an email to the IMF headquarters in Washington DC, requesting the IMF review team to visit Islamabad for talks and the release of the final tranche.

The government led by Prime Minister Shehbaz Sharif is also likely to request the commencement of discussions for a fresh medium-term bailout package for $6 billion under the Extended Fund Facility (EFF). There are strong chances that this could be increased with climate financing of $1.5 to $2 billion more to secure additional financing from the IMF compared to the allocated quota for Pakistan.

Aurangzeb, upon taking the oath at the Presidency, pledged to dedicate all his energies towards addressing the economic and financial challenges currently faced by Pakistan. He acknowledged that the current fiscal year 2024 would be a challenging one and emphasized that it was time for action rather than mere talks.

However, the IMF programme has been a subject of controversy. Dr Ashfaque Hasan Khan, former economic advisor to the finance ministry, has expressed concerns over the IMF’s main target being Pakistan’s defence budget. He pointed out that India, which holds significant influence in the IMF, has asked the IMF not to allow the diversion of the IMF money towards Pakistan’s defence budget.

Khan also raised questions about the role of Gita Gopinath, the IMF’s First Deputy Managing Director, who is an Indian citizen, in the IMF’s relations with Islamabad. He suggested that the IMF could implement India’s desire against Pakistan through more currency devaluation, keeping the policy rate of the State Bank of Pakistan high, maintaining Primary Surplus in the budget along with restrictions on cutting the development budget.

As Pakistan prepares for these crucial talks, the country’s economic future hangs in the balance. The outcomes of these discussions will have significant implications for Pakistan’s economy and its ability to address its current financial challenges.

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