Pakistan fails to strike agreement with IMF on EEF; FM Tarin asked to extend US visit

Despite multiple efforts, Pakistan has reportedly failed to strike an agreement with the International Monetary Fund (IMF) on Extended Fund Facility (EFF) that would grant it a $6 billion loan. On October 15, Pakistani Finance Minister Shaukat Tarin commenced his visit to Washington to hold an in-person meeting with IMF management and make efforts to achieve consensus on a Memorandum of Economic and Financial Policies (MEFP). However, it was reported that the global lender was dissatisfied with the country’s macroeconomic framework. 

In the aftermath, the Imran Khan administration has asked Tarin to extend his visit to the US capital and make last-ditch efforts at gaining the IMFs nod. The Pakistani Finance Minister has also been asked to complete the 6th and 7th reviews to facilitate the approval of $1 billion tranches under the EFF programme. Under the EFF, the International Monetary Fund provides loans to help countries struggling with the balance of payment deficits and to rectify their structural imbalances.

According to an IMF statement, "An EFF provides support for comprehensive programs including the policies needed to correct structural imbalances over an extended period."

IMF dissatisfied with Pak's framework 

News agency ANI reported that the IMF is dissatisfied with Pakistan’s macroeconomic framework, despite the Imran Khan administration raising electric tariffs and POL prices. On Friday, Islamabad increased the base power tariff by Pakistani rupees 1.39 per unit to fulfil the IMF's demand to stay in its programme. News International reported that the new prices will come into effect starting November 1 and will stay in place for the whole financial year 2021-2022. 

Previous talks between Pakistan and IMF regarding the $6 billion loan program

Earlier in the month of June, Pakistan and the International Monetary Fund (IMF) held unresolved discussions over a sixth review of the $6 billion loan programme followed by a delay in the next tranche. Finance Minister Shaukat Tarin informed that the talks with the Fund over the sixth economic review remained inconclusive, followed by a delay in the next tranche.  

(With inputs from ANI, Image: @Shaukat_Tarin/Twitter/AP)