Islamabad’s capacity to repay its $11.3 billion International Monetary Fund (IMF) bailout package will be on top of the agenda when Pakistan and the IMF begin their first round of meetings in Dubai on September 25.
During the week-long technical discussions, IMF authorities will review Pakistan’s ability to pay back a remaining debt of approximately $8 billion.
A significant chunk of that amount, $2.9 billion, will be repaid during the current fiscal year 2012-13, out of which Islamabad has already paid $395 million in the first quarter. Following the technical level talks, an IMF team will arrive in Islamabad to hold policy-level dialogue.
A significant part of the parleys will involve meetings with President Asif Ali Zardari and Prime Minister Raja Pervaiz Ashraf.
The IMF has shown its skepticism over Finance Minister Dr Abdul Hafeez Shaikh’s ability to deliver upon debt commitments following a failure by the government to implement crucial reforms under the last bailout programme.
Pakistan’s exposure to the $11.3 billion IMF loan has also obligated the country to hold post-programme monitoring exercises, aimed at keeping a close watch on the economy. This will be the first formal monitoring mission of the IMF.
Sources in the finance ministry said that the country was currently enjoying a relatively comfortable position the external front.
However, they conceded that financing the current account deficit-gap between external payments and receipts remained a challenge, adding that it would likely be one of the thorny issues between both sides.
The government is going to present an estimated current account deficit of $3.2 billion or 1.3 per cent of the Gross Domestic Product (GDP), according to sources.