Pakistan’s hopes for the swift approval of the staff-level agreement (SLA) with the International Monetary Fund (IMF) have hit a roadblock, as the inclusion in the IMF’s executive board agenda remains uncertain until mid-December.
The delay, attributed to efforts by the Ministry of Finance, poses a challenge to the disbursement of the crucial $700 million tranche, leaving the country in a financial limbo.
Despite attempts to secure an early December approval, logistical constraints with the executive board’s availability during the holiday season have pushed the likely date to at least December 14.
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This delay, combined with Pakistan’s exclusion from the IMF’s executive board meeting schedule until mid-December, highlights the potential difficulties in meeting the country’s financing requirements amid an impending dollar deficit.
Critical Quarter Review at Stake
The SLA, essential for the first review of the $3 billion Standby Arrangement (SBA), was reached on November 15 in Islamabad. However, the subsequent delay in executive board approval jeopardizes the timely disbursement of the $700 million tranche, crucial for Pakistan’s economic stability.
The absence of Pakistan from the IMF’s executive board meeting schedule until mid-December adds uncertainty to the country’s financial landscape. Typically, the executive board takes around two weeks for approval after a staff-level agreement.
Given the absence of outstanding prior actions in Pakistan’s case, the delay appears to be a logistical challenge rather than a procedural one. Amid the delay, discussions among policymakers suggest that IMF negotiations on the second review might not commence until after the general elections and the formation of the elected government.
Initially slated for discussions on February 3, 2024, the timeline for the second review might now be adjusted based on the election schedule. With the ongoing SBA program set to expire on April 14, 2024, the delay in the executive board’s approval poses a critical challenge for Pakistan’s economic planning and financial stability.