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IMF to ‘remain engaged’ with Pakistan despite political tumult

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  • “Pakistan authorities have committed not to introduce fuel cross-subsidy,” IMF says.
  • Fund says it sees no indication that Pakistan wants to pause negotiations.
  • Political crisis in the wake of Imran Khan’s arrest have sparked concerns about IMF programme.

Amid speculations that Pakistan’s chances of clinching a long-suspended International Monetary Fund (IMF) bailout have been reduced due to the political situation, the lender clarified that it “remains engaged” with Islamabad, Bloomberg reported Thursday.

Declining to comment on the arrest of former prime minister Imran Khan, the spokesperson of the global lender said: “IMF remains engaged with Pakistan on securing funding and policy assurances with the goal of reaching an agreement on the ninth review of the $6.7 billion loan agreed in 2019.”

“The IMF sees no indication that Pakistan wants to pause negotiations on disbursement from the current programme,” the spokesperson told the foreign publication.

Following the arrest of the Pakistan Tehreek-e-Insaf (PTI) chairman, concerns sparked that Pakistan was edging closer to a default as political unrest will delay an IMF bailout.

“It looks increasingly difficult for Pakistan to avoid a default in the absence of fresh funding support coming in,” said Eng Tat Low, an emerging-market sovereign analyst at Columbia Threadneedle Investments in Singapore.

“I am also growing more skeptical whether an IMF deal is going to come through. Their heavy debt amortisation against precarious reserves would suggest default is imminent,” he added.

Violent protests erupted in Pakistan on Tuesday with dozens injured across several cities and demonstrators attacking military buildings after Khan was arrested. Moreover, the police initiated a crackdown and arrested the top leadership of the party along with thousands of workers.

The rupee slumped to a record low and slid over 3% a dollar on Thursday. Dollar bonds due 2031 fell to the lowest since November and were indicated at 33.10 cents on the dollar.

‘No petrol subsidy’

Moreover, the Fund also revealed that Pakistani authorities have committed to the lender that petrol subsidy would not be introduced.

“Pakistan authorities have committed not to introduce fuel cross-subsidy scheme in F23 [fiscal year 2022-23] and beyond,” the spokesperson said.

The statement comes as a surprise as Minister of State for Petroleum Dr Musadik Malik, on Tuesday, said that Pakistan aims to address IMF’s concerns before implementing its new fuel subsidy plan.

“The IMF had some reservations about the government’s plan to raise fuel prices for wealthier motorists to finance a subsidy for lower-income people”, he said on Bloomberg TV in an interview.

Malik said: “We originally thought that it was a much simpler idea. We want to make sure now that if we move forward, we take care of their concerns and make sure that they completely understand what we are trying to do and why.”

However, the Washington-based lender has now said that Pakistan has already committed to the Fund that it would not introduce the subsidy.

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Changes in the US dollar’s value are directly correlated with variations in gold prices.

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The price of 24-karat gold in Pakistan increased by Rs1500 on Thursday, reaching Rs231,000 per tola. This was another jump in the price of gold in the country.

Dealers reported a comparable surge in the price of 10 grams of 24-karat gold, which is currently trading at Rs198,045 after rising by Rs1285. In addition, the cost of ten grams of 22-karat gold increased significantly, trading at Rs 181,541.

These fluctuations are strongly correlated with shifts in the US dollar’s value, demonstrating the tight connection between gold prices and exchange rates. This emphasizes how local gold markets are impacted by variables related to the global economy.

At Rs2,580, the price of 24-karat silver remains steady right now. The price of gold increased significantly on a global scale as well, rising by $14 to $2,214 per ounce.

It’s critical to understand that changes in the worldwide market can have a substantial impact on gold prices in Pakistan throughout the day. The gold rates that are offered are obtained from reliable sources, mostly situated in Karachi and Multan.

It is recommended that individuals seek the advice of nearby gold merchants and jewellers for the most precise and current information regarding gold prices.

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Pakistan pledged to finish building the TAPI gas pipeline.

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The minister discussed the importance of the TAPI gas pipeline project for Pakistan’s energy needs during a meeting with Turkmenistan’s ambassador to Pakistan, Atadjan Movlamov.

The Minister was congratulated by Ambassador Movlamov on taking office and his commitment to the project was noted.

Dr. Musadik Malik thanked the ambassador for his kind words, acknowledged the support, and promised to maintain the two nations’ friendship. The intergovernmental commission and working group meetings for the project this year were briefed by Atadjan Movlamov.

He invited the Minister to attend the Turkmenistan Energy Forum, which would take place in Paris the following month.

TAPI undertaking
The project is for the construction of a 1,680-kilometer pipeline with a 56-inch diameter that can carry 3.2 billion cubic feet of gas per day (bcfd) from Turkmenistan through Afghanistan and Pakistan to the border between Pakistan and India.

According to the terms of the TAPI agreement, Afghanistan would receive its portion of 0.5 billion cubic feet of gas per day, while Pakistan and India will each receive 1.325 billion cubic feet of gas per day.

In order to carry out the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project, Pakistan and Turkmenistan inked a cooperative implementation plan in Islamabad on June 4.

Prime Minister Shehbaz Sharif and a delegation from Turkmenistan, led by Minister of Energy and Water Resources Daler Juma’a, were present at the ceremony.

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The price of gold is still rising in Pakistan.

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According to the All Sindh Sarafa Jewellers Association, the cost of 10 grams of 24 karat gold grew by Rs. 86 to Rs. 196,760 from Rs. 196,674, while the cost of 10 grams of 22 carat gold jumped to Rs. 180,363 from Rs. 180,284.

The price of silver per tola and ten grams stayed at Rs. 2,211.93 and Rs. 2,580, respectively.

According to the Association, the price of gold on the global market rose by $7 to $2,200 from $.2,193.

It is important to note that Pakistani and IMF personnel have agreed at the staff level on the second and final review conducted as part of Pakistan’s Stand-By arrangement.

The International Monetary Fund (IMF) and Pakistan have reached a staff-level agreement on the second and final review of Pakistan’s stabilization program, which is supported by the IMF’s US$3 billion (SDR2,250 million) SBA Agreement. This is according to the official statement released by a team led by Nathan Porter.

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