With just 48 hours left in the timeline for the conclusion of the pending 9th Review, the IMF has not yet shared the draft of Memorandum of Financial and Economic Policies (MEFP) with the Pakistani authorities, a document on the basis of which a staff level agreement would be struck.
Till Tuesday night, the IMF had not shared the draft MEFP with the Pakistani negotiators; however, the Ministry of Finance high-ups are still confident that the staff level deal with the IMF mission might be struck within the envisaged timeline of February 9, 2023. If it did not happen, then the possibility of extending the review talks could not be ruled out.
The IMF is really concerned about external front inflows and the Fund is currently seeking confirmation from friendly countries, including Saudi Arabia, China, the UAE, and other avenues to secure dollar inflows for Pakistan in order to keep gross foreign exchange reserves at a comfortable level.
The foreign exchange reserves held by the State Bank of Pakistan stood at slightly over $3 billion and are going to deplete on a weekly and monthly basis. The gross foreign exchange reserves might not exceed $6 billion or the maximum it can touch $8 billion, said sources. It is yet to be seen how much figure the IMF incorporates into the draft MEFP document, which would pose serious repercussions for generating the desired and much-needed dollar inflows at a time when we have close to around $3bn.
“The fingers are still crossed as the ongoing parleys may be extended if both sides are unable to resolve the lingering differences on overall fiscal framework and power sector subsidies,” top official sources said and hoped that the IMF mission would share the draft MEFP, along with nine tables, on Wednesday (today) and they would be able to conclude the pending 9th Review by Thursday (February 9, 2023). The Pakistan authorities are not expecting any more meetings with the IMF before the exchange of MEFP document. Once the MEFP document will be handed over, then the time-frame for taking corrective actions would be finalised.