Islamabad: Pakistan’s Finance Minister Ishaq Dar expressed optimism that the country will soon sign a staff-level agreement with the International Monetary Fund (IMF). The funds will provide much-needed relief for the nation facing a serious economic crisis.

Dar said he and his team were “absolutely committed” to completing the current IMF programme.

“We have been in the process of the 9th review which has taken longer than it should have … We seem to be very close to signing the staff-level agreement, hopefully in the next two days,” Dar said speaking at a seminar in Islamabad on Thursday.

The finance minister has said that the country faces a “precarious situation” but it won’t default.

Pakistan and IMF are continuing virtual discussions to finalize the implementation of the agreement and secure a $1.1 billion tranche from the $7 billion IMF bailout program. Pakistan held 10 days of intensive talks with an IMF delegation in Islamabad from January 31 to February 9 but could not reach a deal.

Challenges

Pakistan has now met most of the global lender’s prior actions which included hikes in fuel and energy tariffs, the withdrawal of subsidies in export and power sectors, a market-based exchange rate, and generating $170 billion in revenue through new taxation in a supplementary budget.

Dar acknowledged the challenges presented by the current economic situation and urged participants at the seminar to come up with policy recommendations and solutions for reviving the economy. He emphasized that the upcoming budget will be a step towards taking the country out of the economic quagmire.

The finance minister said that Pakistan had faced similar economic challenges in the past, but the country had been able to overcome them. He also mentioned the austerity measures recently announced by Prime Minister Shehbaz Sharif.

Pakistan has been facing a severe economic crisis amid surging inflation, dwindling forex reserves, and currency depreciation. The country desperately needs external financing to keep the economy afloat. The IMF loan revival would help unlock inflows from friendly countries and multilateral lenders.

This month, Pakistan’s long-time ally China announced the rollover of a $1.3 billion loan to help shore up its foreign exchange reserves. Pakistan has already received a $700 million loan from China Development Bank in February 2023, taking the total relief to $2 billion.