Pakistan hopes for bailout decision in day or two as IMF seeks deal ‘quickly’

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Pakistan hopes for bailout decision in day or two as IMF seeks deal 'quickly' © Reuters. FILE PHOTO: The International Monetary Fund (IMF) logo in Washington, United States, September 4, 2018. REUTERS/Yuri Gripas/File Photo

ISLAMABAD (Reuters) -Pakistan hopes a bailout decision from the International Monetary Fund (IMF) will come in a day or two, its prime minister said on Tuesday, as the global lender said it was holding talks with the aim of “quickly reaching an agreement”.

Islamabad has been waiting for a deal after taking policy and fiscal tightening decisions required by the IMF for the disbursal of $1.1 billion under the lender’s ninth review of a $6.5-billion Extended Fund Facility agreed in 2019.

Pakistan’s finance minister Ishaq Dar added in an interview on Tuesday evening that the government was searching for a mechanism to receive all pending funds under the IMF programme, which would amount to $2.6 billion.

The IMF’s mission chief for Pakistan said in a statement that Pakistani authorities had taken “decisive measures” to bring policies in line with the economic reform programme supported by IMF, including changes to its annual budget, steps to improve the currency, and tightening monetary policy.

“The IMF team continues discussions with Pakistani authorities with the aim of quickly reaching an agreement on financial support from the IMF,” mission chief Nathan Porter said.

Prime Minister Shehbaz Sharif said earlier in the day that he hoped consensus over the IMF programme’s points “will lead to a decision in a day or two”.

The statement from the prime minister’s office added that Sharif spoke to IMF Managing Director Kristalina Georgieva about the country’s bailout funds, stalled since November. The two had also met in Paris on June 22.

With the bailout programme set to expire on June 30, Pakistan has also revised its budget for the financial year starting on July 1, and hiked policy rates to 22% in its desperation to clinch the deal, key to unlocking other external financing for the cash-strapped nation.

Dar said that the IMF had demanded that the key policy rate be raised to 22% and that the review “will be done.”

The IMF funds subject to approval by its board promise respite for Pakistan, which is battling its worst economic meltdown, with an acute balance of payments crisis and falling reserves of foreign exchange.

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