ISLAMABAD: Pakistan has entered into a little delayed fourth review of the $6.8bn programme with the International Monetary Fund. By August 18, it would be clear in which direction the talks with the fund staff have moved and if its executive board would extend a couple more waivers and disburse the $550m fifth tranche in the first week of September.
One would wish the political drama created by minority parliamentary leader Imran Khan and nonrepresentative Tahirul Qadri on the August 14 independence day to subside before the IMF staff returns to Washington. The political developments may have a bearing on the IMF talks concluding on August 18.
The IMF decision would impact the perception of the credit rating agencies and set the direction of cooperation with multilateral creditors and investors at an investors conference scheduled by the USAID for the $14bn Diamer Bhasha dam in early October.
On the technical front, the government team has to intelligently and rigorously apply the programme adjuster on the performance indicator of net international reserves (NIR) of the State Bank of Pakistan (SBP), and then seek a waiver on the failure to achieve the target by a small margin.
But this is something where the government has been struggling all along since the programme was activated early last fiscal year, and the Fund has willingly granted waivers.
The government and the IMF have been at odds over the kind of autonomy that is to be entrusted to the SBP.
In this regard, the government was required to get the SBP Act amended by end-June 2014 to set price stability as the central bank’s primary objective, and strengthening its governance and internal control framework ‘in line with Fund staff advice’.
While the delayed talks have helped the government meet another benchmark for appointment of a financial adviser for PIA’s restructuring and privatisation - a target that was missed for two previous consecutive quarters.
Advertisements have already been issued seeking applications for financial and consultancy advisers for the two power distribution companies of Islamabad and Lahore.