Shehbaz Sharif meets IMF managing director in Paris

Prime Minister Shehbaz Sharif on Thursday briefed International Monetary Fund (IMF) managing director Kristalina Georgieva on the economic outlook of the cash-strapped South Asian nation, hoping for the release of critical stalled funds.

The meeting and the situation

The meeting on the sidelines of the Global Financing Summit in Paris came with about a week left before the IMF’s Extended Fund Facility (EFF) agreed in 2019 expires on June 30.

Under the $6.5 billion EFF’s 9th review, concluded earlier this year, Pakistan has been trying to secure $1.1 billion of funding that has been stalled since November.

Sharif’s hopes and overview

“The Prime Minister expressed the hope that the funds allocated under the IMF’s EFF would be released as soon as possible,” said a statement from his office.

It said Sharif outlined the steps Pakistan had taken for economic growth and stability, adding that his country had already completed all the IMF’s conditions to meet the 9th review.

The crisis and the funding

With central bank foreign exchange reserves barely enough to cover one month of controlled imports, Pakistan is facing an acute balance of payment crisis, which analysts say could spiral into a debt default if the IMF money doesn’t come through.

The IMF funding is critical to unlock other bilateral and multilateral financing.

Pakistan’s frustration and IMF’s concerns

Islamabad has expressed its frustration over the delay. It argues it has met all the painful fiscal measures the lender requested.

The IMF, however, still has concerns over Pakistan’s external financing gap, foreign exchange market operations and the budget presented earlier this month which it said violated the programme’s objective.

Pakistan’s defense and offer

Pakistan has defended the budget, but at the same time offered to review it in any further talks with the IMF.