IMF backs new Pakistan programme, urges electoral row resolution

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IMF backs new Pakistan programme, urges electoral row resolution © Reuters. People cross a street as the rally of supporters of the Tehreek-e-Labbaik Pakistan (TLP), a religious and political party, demanding free and fair results of the election, approaches the Mall Road in Lahore, Pakistan February 10, 2024. REUTERS/Navesh Chit

By Ariba Shahid

KARACHI (Reuters) – The International Monetary Fund (IMF) will support formulating a new economic programme for Pakistan if the new government seeks one, a spokesperson for the lender said on Friday, encouraging fair resolution of all electoral disputes.

The cash-strapped nation grappled with an uncertain Feb.8 election that delayed formation of a coalition government until new Prime Minister Shehbaz Sharif was sworn in on Monday, though a new finance minister has yet to be decided.

“We look forward to engaging with the new government to complete the second review under the current stand-by arrangement and, should the government request, support the formulation of a new medium-term economic program,” the Fund spokesperson said in an e-mail.

The reference was to a $3-billion standby arrangement Pakistan secured last summer from the IMF, though the country has been struggling with record inflation, currency devaluation and shrinking foreign reserves.

The party of jailed former prime minister Imran Khan asked the IMF last month to ensure an audit of the disputed February election before any more bailout talks with Islamabad.

The IMF said that while it did not comment on domestic political developments, it encouraged the fair and peaceful resolution of all electoral disputes, given the importance of the institutional environment for economic stability and growth.

The finance ministry and Khan’s party, Pakistan Tehreek-e-Insaf, did not immediately respond to a request for a comment.

Sharif has asked his government to open talks with the IMF for a new programme after clearing the stand-by arrangement.

After a new cabinet is formed, the fund stands ready to send a mission for the second review of the stand-by arrangement, IMF communications official Julie Kozack told a briefing.

The focus is to complete the current stand-by program, which ends in April 2024, she added.

Pakistan’s sovereign dollar bonds gained as much as 3 cents on Friday, to hit their highest since early 2022.

The 2036 maturity gained the most, adding 3.3 cents to trade at 76.89 cents, on track for a second week of gains of about 5 cents, Tradeweb data showed.

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