Pakistan and the IMF have begun talks online on a ninth review of a $7 billion loan programme, the Finance Ministry said on Monday, after a media outlet reported that the lender had asked the country to cut its expenses.
The government has shared fiscal data, including flood and related expenditures, with the IMF and an IMF team is expected to visit Islamabad soon, the ministry added. A local IMF representative did not respond to a request for comment.
Pakistan has been reeling from the impact of floods this year that killed more than 1,700 people, destroyed farmland and infrastructure and exacerbated an economic crisis marked by decades-high inflation and dwindling foreign exchange reserves.
“The IMF understands that the floods have changed the macroeconomic assumptions on which the programme was designed,” the ministry told Reuters. “Detailed analysis is being conducted by their team using the data provided.”
Pakistan reserves stood at $7.8 billion as of Nov. 18, barely enough to cover imports for a month. The Pakistan Stock Exchange fell around 2% on Monday, its first day of trading after the central bank unexpectedly hiked its key policy rate to 16% last week.
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ARY News reported on Monday that the IMF had asked Pakistan to reduce expenses before talks on the ninth review. Pakistan secured a $6 billion bailout in 2019 that was topped up with another $1 billion earlier this year. The IMF’s board approved the seventh and eight reviews in August, allowing the release of more than $1.1 billion. The ninth review has been pending since September. The IMF told Reuters last week that finalisation of a recovery plan from the floods was essential to support discussions, along with continued financial support from multilateral and bilateral partners.