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Pakistan is seeking a crucial installment of $1.1 billion from the IMF to avoid the possibility of a sovereign default. Image Credit: AFP file

Islamabad: The International Monetary Fund (IMF) said that its mission would visit Pakistan on January 31, raising hopes for the revival of the bailout programme stalled in the past months.

At the request of Pakistani authorities, the Washington-based global lender has agreed to send a mission. The IMF team is scheduled to visit Islamabad from January 31 to February 9 to continue the discussions under the ninth extended fund facility (EFF) review.

The development comes a day after the Pakistani finance ministry officials held a meeting in Islamabad with US treasury department delegation. Pakistani media reported that the meeting was part of efforts to convince the IMF to revive the stalled programme and release $1.1 billion. Pakistan entered the $6 billion IMF programme in 2019, which was raised to $7 billion this year. Pakistan will get $1.18 billion after the programme’s ninth review, which is currently pending.

PM hopeful of revival of IMF programme

On Friday, Prime Minister Shehbaz Sharif said that he is confident that the government would reach an agreement with the IMF this month which would help Pakistan “get out of these difficulties”. He hoped that the IMF loan revival would help unlock inflows from friendly countries and multilateral lenders.

Pakistan is seeking a crucial installment of $1.1 billion from the IMF to avoid the possibility of a sovereign default. With interest rates at 17%, inflation hitting 24.5% in December, and foreign reserves barely enough to cover three weeks of imports, Pakistan is in urgent need of external financing to support the battered economy.

Pakistan’s coalition government continues to face mounting pressure over its economic strategy and particularly the policies of finance minister Ishaq Dar. However, Dar insists the economic issues are “not the result of the current government’s eight months in power but the previous administration” and said that the country needed introspection into the economic downfall over the years.

Former finance minister and also PMLN leader, Miftah Ismail, also criticised Dar’s policies saying Pakistan suffered “a big loss” due to his successor Ishaq Dar’s reluctance in approaching the IMF. Dar has been publicly criticized for the dollar peg, basically fixing the interbank rate which led to a widening gap in official and open market rates, encouraging the black market, and causing a huge decline in remittances sent through banking channels.

Biggest one-day drop in PKR

On Thursday, the Pakistani rupee fell 9.6 per cent against the dollar in the interbank market, the biggest one-day drop in over two decades, after the unofficial cap on the currency’s exchange rateexchange rate was removed. On January 25, the Pakistani currency (PKR) closed at Rs230.89 against the United States dollar (USD) but on January 26, the rupee plunged to a historic low of Rs255.43. On Friday, the PKR continued to depreciate in the interbank market, trading at Rs266.6 per dollar.