By Asif Shahzad
ISLAMABAD (Reuters) – Pakistan has had to reluctantly accept strict conditions of a deal with the International Monetary Fund (IMF) to provide a lifeline to a shaky economy, Prime Minister Sheikh Baz Sharif said on Friday.
Sharif held a live-streamed meeting with senior security officials from his Islamabad office.
“We had to settle for the tough terms of the IMF deal,” he said, adding that a deal was still “a week, days away.” “.
The Pakistani authorities have been negotiating with the IMF on the policy framework since early February and hope to sign a staff-level agreement for more funding from other bilateral and multilateral lenders. Multiple capital inflows paved the way.
When the agreement is signed, lenders will pay over $1 billion out of the $6.5 billion bailout agreed in 2019.
Pakistan has taken a series of measures including adopting a market-based exchange rate; raising tariffs on fuel and electricity; removing subsidies and increasing taxes to generate revenue to cover the fiscal deficit.
Lenders are still negotiating with Islamabad on power sector debt and a possible rise in the policy rate, which is currently at 10, officials said ) %.
Strict measures could further cool the economy and fuel inflation, which is at 50.50% moon.
The South Asian country’s economy is in turmoil and it desperately needs external financing, with foreign exchange reserves falling to around $3 billion, barely enough to cover three weeks of imports.
Sharif said a “friendly country” was also waiting for a deal to be confirmed before offering support to Pakistan, without elaborating.
Long-time ally China announced this week that the refinancing amount is 50 million dollars, according to Pakistan’s finance ministry.
Finance Minister Ishaq Dar said on Friday that the Central Bank of Pakistan had the money.
“Thank God,” he said in a tweet.