Islamabad (Web Desk/agencies): Pakistan and International Monetary Fund (IMF) on Wednesday reached a staff level agreement on the second and final review under Stand-By Arrangement (SBA).
This came during meetings between Pakistani authorities and the IMF team led by Nathan Porter in Islamabad.
“The IMF team has reached a staff-level agreement with the Pakistani authorities on the second and final review of Pakistan’s stabilization program supported by the IMF’s US$3 billion (SDR2,250 million) SBA approved in January 2024, Nathan Porter said in a statement following the talks.
This agreement is subject to approval by the IMF’s Executive Board, upon which the remaining access under the SBA, US$1.1 billion (SDR 828 million), will become available.
The IMF mission chief said that Pakistan’s economic and financial position has improved in the months since the first review, with growth and confidence continuing to recover on the back of prudent policy management and the resumption of inflows from multilateral and bilateral partners.
Nathan Porter recognized the new government's commitment to continue the policy efforts that started under the current SBA to entrench economic and financial stability for the remainder of this year.
The IMF further stated that ongoing policy and reform efforts are required to address Pakistan’s deep-seated economic vulnerabilities amidst the ongoing challenges posed by elevated external and domestic financing needs and an unsettled external environment.
“The new government is committed to continuing the policy efforts that started under the current SBA to entrench economic and financial stability for the remainder of this year. In particular, the authorities are determined to deliver the general government primary balance target of Rs401 billion (0.4 percent of GDP), with further efforts towards broadening the tax base, and continue with the timely implementation of power and gas tariff adjustments to keep average tariffs consistent with cost recovery while protecting the vulnerable through the existing progressive tariff structures, thus avoiding any net circular debt (CD) accumulation in FY24," the statement added.
The IMF statement further acknowledged that the State Bank of Pakistan (SBP) remains committed to maintaining a prudent monetary policy to lower inflation and ensure exchange rate flexibility and transparency in the operations of the foreign exchange market.
The IMF team thanked the Pakistani authorities, private sector, and development partners for fruitful discussions and cooperation throughout this mission.
