Pakistan is in talks with the International Monetary Fund (IMF) to put the fiscal support programme back on track, State Bank of Pakistan Governor Dr Reza Baqir said on Monday, adding that he was optimistic about the economic outlook despite the fallout from the coronavirus pandemic.
With dwindling foreign exchange reserves and a struggling economy, Pakistan entered a three-year $6 billion IMF bailout programme in 2019, but is yet to have its second review approved, which has been pending since early last year.
“We hope to have good news for the market and the world that we are putting the programme back on track,” Baqir said in an interview on Monday at the Reuters Next conference.
Last year, staff from the IMF and Pakistani authorities reached an agreement to pave the way for a disbursement of $450 million in IMF funds pending approval from the global lender’s executive board, which is yet to take place.
Baqir said there was no disagreement on the end goal between the two sides, and that Pakistan needs to increase its low tax-to-GDP ratio.
Pakistan and the IMF have been working to implement IMF-supported economic reforms, in particular tax collection, aimed at stabilising the economy and shoring up a yawning fiscal deficit.
Though the bailout programme is still pending, Pakistan received $1.4 billion in emergency financing from the IMF to allow it to fund targeted and temporary spending increases aimed at containing the pandemic and mitigating its economic impact.
Authorities are counting on the IMF bailout package to bolster Pakistan’s fiscal position and increase global confidence in its economy.