- Pakistan can apply for an enhanced quota as it did in 2008.
- You can increase the SAF through a climate finance instrument.
- Pakistan is exploring the possibility of requesting RSF from the IMF.
ISLAMABAD: Pakistan will submit a formal request to the International Monetary Fund (IMF) for a new, longer and larger bailout package under the Expanded Fund Facility (EFS) next month. News reported on Sunday.
The country is expected to request a new IMF rescue package of more than $8 billion with the possibility of increasing it through climate financing at the upcoming spring meetings of the Breton Wood institutions, known as the IMF/World Bank, scheduled to be held in Washington. DC, April 15-20.
A Pakistani delegation, led by Finance Minister Muhammad Aurangzeb and comprising Finance Secretary Imdadullah Bosal, EAD Secretary Kazim Niaz and State Bank of Pakistan Governor Jamil Ahmed, will participate in the meetings.
There are two possibilities for Pakistan to request an increasing size of the EEF program. The first is that the inflation-hit country can apply for its enhanced quota as it did in 2008, when Islamabad got 700% of its quota during the Pakistan People's Party (PPP) government.
The other possibility is to increase the SAF through a climate finance instrument, as Pakistan qualifies to receive it due to the worst climate degradation in recent years.
Pakistan can also combine both options keeping in mind the requirement for a longer and larger program by Pakistan as the quota could be improved and increased through climate finance.
According to sources, the IMF review mission is in Pakistan to complete the second review of the $3 billion standby arrangement (SBA) program and release the third and final tranche of $1.1 billion. However, discussions are ongoing about the broader EFF programme.
If the talks conclude positively, the global lender will release the last tranche of $1.1 billion until April 12.
“Taking into account the limited deadline, the IMF mission has shortened its negotiation period and will hold talks from March 14 to 18 so that they can prepare the draft Memorandum of Economic and Financial Policies (MEFP) within the limited deadline,” they confirmed. the sources. to News.
The Pakistani side may prefer to verbally inform the IMF team about another bailout package; However, the IMF team focused on discussing the ongoing SBA program.
There could be a similarity between Pakistan and Egypt's IMF program as the latter's funding was recently increased to $8 billion with strict conditions under which the policy rate was increased by 600 basis points with a recent increase in the 200% and an expected devaluation of 30%, warned an independent body. economists.
The South Asian country is exploring the possibility of applying to the IMF for the Resilience and Sustainability Facility (RSF), under which countries are provided with affordable long-term financing with reforms to reduce risks to the future stability of the balance of payments, including those related to climate. change and preparedness for a pandemic.
It will provide longer-term financing to strengthen economic resilience and sustainability by (i) supporting policy reforms that reduce macrocritical risks associated with climate change and pandemic preparedness, and (ii) increasing policy space and financial buffers for mitigate the risks arising from these longer-term structural challenges.
