Pakistan and IMF fail to strike deal once again under $6bn extended fund facility

ISLAMABAD – Pakistan and the International Monetary Fund (IMF) have failed to strike a staff-level agreement in wake of differences over the macroeconomic framework besides uncertainty over the future roadmap of the economy.

It was for the second time that Pakistan and the global lender could not find the basis for the completion of the 6th review – the first attempt made in June also remained inconclusive.

Reports in local media quoting sources said the recent round of talks from October 4 to 15 remained inconclusive as both sides have failed to reconcile on the Memorandum of Economic and Financial Policies (MEFP) despite the surge in electricity and petroleum products prices in Pakistan.

Reports further added that the IMF staff is unconvinced with the macroeconomic framework under the MEFP and without agreement over it, the staff-level agreement will not be struck and the IMF tranche will be jeopardised.

Meanwhile, Islamabad expects the finance secretary to prolong his stay in the US capital for the next few days to make further efforts in reconciling and evolving consensus on the MEFP and completion of the sixth and seventh reviews, to pave way for the approval of $1 billion under the IMF Extended Fund Facility.

It also added that the US-based lender demanded to impose additional taxes equal to at least 1 percent of the GDP or over Rs525 billion however the incumbent government was willing to take measures to the tune of Rs300 billion.

Earlier in 2019, both sides signed a 39-month EFF for $6 billion but the program remained largely off track, resulting in disbursements of only $2 billion in two years.