Talks with imf Failed, Difficult Time for Pakistan

However, a set of measures that could still assist in securing the agreement and preventing an imminent default were agreed upon by both parties.

Officials from Pakistan hoped to convince the IMF of their sincere intentions for gradually enforcing all pending conditions.

However, the IMF mission's 10-day stay ended on Thursday without a staff level agreement, so expectations were dashed.

The government did not give the IMF mission led by Nathan Porter enough and convincing assurances. Finance Minister Ishaq Dar failed to achieve the ultimate objective of reaching a staff-level agreement despite holding consecutive meetings.

"Actions and prior actions have been agreed but the staff level agreement will be announced later," Finance Secretary Hamed Yaqoob Sheikh stated while confirming that the IMF mission would depart early on Friday.

Due to a crisis in Pakistan's credibility, the IMF imposed numerous conditions because it was unwilling to blindly trust Pakistan this time. To break the impasse, IMF Mission Chief Nathan Porter and Prime Minister Shehbaz Sharif held an unannounced virtual meeting.

Dar was compelled to postpone his media briefing due to inconclusive discussions, despite his promise to inform the nation of the good news before midnight. The news conference might take place today (Friday).

Pakistan's foreign exchange reserves have decreased to just $2.9 billion, the lowest level since February 2014. In order to unlock $1.1 billion, Pakistan urgently needs board and staff agreement for the ninth review. The country needs at least $7 billion to pay off its external debt, but its reserves won't cover imports for less than two weeks.

In addition, Prime Minister Shehbaz Sharif was busy adding 85 members to his cabinet at the same time that the IMF was in the town trying to get the government to tighten its belt.

"The final set of actions that Pakistan agreed to implement is short of the mandate that the IMF gets from its headquarter to finalize the staff level agreement," stated a senior finance ministry official. The mission requires management approval in Washington, which is why the staff level agreement is a little behind schedule.

The remaining work should be finished within two to three days, according to the government's optimism. Because the IMF discussed the draft of the Memorandum for Economic and Financial Policies just before the review talks were scheduled to end, the staff level agreement could not be reached on the same day.

The first, but most important, step in obtaining the IMF board's approval for the completion of the ninth review is the staff level agreement. The senior official stated that the IMF shared the MEFP's numbers on Thursday, but it was the government's fault that it did not obtain the draft MEFP.

Prior to this point on Thursday, Finance Minister Ishaq Dar stated that the public would soon receive "good news" and that the IMF's "matters will be settled today" (Thursday).

One of the obstacles was Pakistan's inability to close its enormous gap in external financing without the assistance of commercial, bilateral, and multilateral creditors.

The senior finance ministry official claims that IMF representatives met with the nations' ambassadors who have pledged to provide Pakistan with loans.

The International Monetary Fund (IMF) questioned China, Saudi Arabia, and the United Arab Emirates regarding their commitment to lending to Pakistan.

Saudi Arabia is looking into the possibility of providing a $2 billion loan extension, despite the fact that Prime Minister Shehbaz Sharif stated that the United Arab Emirates would provide an additional $1 billion. Pakistan had requested $1.5 billion in additional loans from China in addition to repaying its existing debt. It should be noted that China has been withdrawing individual commercial loans.

In the end, the government agreed to almost all of the IMF's requests for the MEFP and staff level agreement, but the global lender wanted the actions taken right away.

"The fund rejects Pakistan's gradual approach proposal by saying that everything must be done upfront," the sources claim.

There was general agreement that the value of the rupee should be left to the market, that import restrictions should be lifted, and that imported goods should be cleared.

Pakistan's warning to the IMF that inflation could reach 29 percent necessitates a significant increase in interest rates. The power tariff will go up, and there will be new taxes, to make room for the deal.

Due to the severity of the economic crisis, the vast majority of Pakistanis would find it difficult to implement any agreed-upon measures.