US agrees to help Pakistan negotiate IMF bailout deal

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Earlier, media reports had claimed that Islamabad was “seeking Washington’s support” for renewing its EFF with the IMF….reports Asian Lite News

The US has agreed to help cash-strapped Pakistan negotiate a deal with the IMF for the revival of the country’s economic bailout programme with the global lender, a media report.

Pakistan and the IMF have not yet been able to reach close to a staff-level agreement for the revival of the Extended Fund Facility (EFF), leaving Pakistani authorities in a tight spot to bridge the gap and get the updated federal budget for the fiscal year 2022-23 passed by the National Assembly, the Dawn newspaper reported.

The US has agreed to help Pakistan negotiate a deal with the International Monetary Fund (IMF), the newspaper, quoting unnamed diplomatic sources, reported on Sunday.

Earlier, media reports had claimed that Islamabad was “seeking Washington’s support” for renewing its EFF with the IMF.

As the largest shareholder, the US has considerable influence over the IMF’s decision-making.

On Saturday, Pakistan’s Ambassador to the United States Masood Khan met Assistant US Trade Representative (USTR) for South and Central Asia Christopher Wilson to discuss expanding trade relations between the two countries and encouraging US investments in Pakistan, a statement said.

The office of the USTR is responsible for developing and coordinating US international trade, commodity, and for directing investment policy. It also oversees trade negotiations with other countries, the newspaper reported.

Pakistan signed a 39-month, USD 6 billion EFF in July 2019, but the IMF stopped the disbursement of about USD 3 billion when the previous government reneged on its commitments, the report added.

Currently, Islamabad wants the IMF to not only resume disbursements but also expand the size and duration of the programme, the report said.

A top finance ministry official confirmed on Sunday night that they had not yet received the first draft of the memorandum of economic and financial policies (MEFP) from the IMF as targeted earlier because certain matters remained unsettled.

“We are working very closely with the IMF and will soon reach some conclusion,” the official said.

The government is aiming to secure the passage of the budget 2022-23 from the National Assembly on June 27-28, according to the finance ministry.

Pakistan has repeatedly been seeking international aid to support its failing economy.

In May, Saudi Arabia agreed to provide Pakistan with a “sizable package” of around USD 8 billion to help the cash-starved country bolster dwindling forex reserves and revive its ailing economy.

Pakistan secured the deal during the visit of Prime Minister Shehbaz Sharif to Saudi Arabia in April. The financial package includes doubling of the oil financing facility, additional money either through deposits or Sukuks and rolling over of the existing USD 4.2 billion facilities.

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