ISLAMABAD (Reuters) – Pakistan opened long-delayed talks with the International Monetary Fund on Wednesday, seeking the release of more funds from a $6 billion rescue package agreed in 2019 to help shore up the South Asian nation’s battered economy.
Pakistan has already asked the IMF to increase the size and duration of its $6 billion programme, with foreign reserves falling as low as $10.3 billion so that they cover less than two months of imports, a widening current account deficit, surging inflation and a plunging currency.
“Talks with the IMF mission started today,” the Finance Ministry said in a statement, adding that Finance Minister Miftah Ismail and the acting central bank governor would join the talks virtually.
A finance team has already headed to Doha for consultations with the IMF that are due to last until May 25 before the lender takes a decision, the ministry said.
The rupee weakened to about 198.39 to the dollar on Wednesday, the central bank said, a historic low that means it has lost almost a quarter of its value in the past year.
The finance minister requested a bigger IMF package on a visit to Washington last month. Following that request, the IMF said Islamabad had agreed to roll back unfunded subsidies to the oil and power sectors.
From March to June, Pakistan is expected to spend about $2 billion on subsidies which have yet to be withdrawn.
The government that took over in April after the collapse of Prime Minister Imran Khan’s administration fears a public backlash if it withdraws the subsidies on which many Pakistanis rely.
About half of the existing package of $6 billion has been disbursed so far, but more recent payments were delayed several times due to IMF concerns about fiscal policy measures.
If the current review is successful, Pakistan will receive more than $900 million, which will help unlock other external financing.