IMF board meeting likely to be held on December 7 to consider Pakistan issue

The logo of the International Monetary Fund (IMF) is seen at the IMF Headquarters building during the IMF/World Bank annual meeting in Washington, US on October 14, 2017.  - IMF
The logo of the International Monetary Fund (IMF) is seen at the IMF Headquarters building during the IMF/World Bank annual meeting in Washington, US on October 14, 2017. – IMF
  • Meeting to consider the government’s request for loan approval.
  • The government has agreed to revise the gas tariff from January 2024.
  • It was decided to reduce circular debt.

ISLAMABAD: The government is expecting final approval from the International Monetary Fund (IMF) to approve the $700 million tranche as the executive board meeting is likely to be held on December 7. news Reported on Saturday.

To do this, the government will have to increase quarterly electricity tariff adjustments to control the rising circular debt.

Top officials told news On Friday, power companies had sought determination of quarterly tariff adjustment from Nepra and it is expected that it will be determined within the next few weeks.

The date of hearing has not been officially decided yet but quarterly tariff adjustment for the first quarter (July-September) was due and it will be done soon.

Secondly, the government has also agreed to revise gas tariffs from January 2024, with dollar-denominated tariffs likely to see a further increase in the coming months with the aim of reducing circular debt.

The IMF has already estimated that the circular debt of the energy sector has exceeded 4% of GDP i.e. more than Rs 4,000 billion.

To a question about the possibility of an Executive Board meeting on December 7 to consider Pakistan’s request for approval of the $700 million tranche under the SBA programme, Finance Ministry spokesperson Qamar Abbasi said the IMF has not yet Islamabad has not been officially informed about the date. meeting.

Sources said Pakistan and the IMF have developed consensus on eight charts, including the vision of limiting the fiscal deficit and keeping the primary surplus in the range of 0.4% of GDP, and debt repayment for the current fiscal year at around Rs 8.3 trillion. Will be Rs. Against the budgetary target of Rs 7.3 trillion.

The IMF had earlier assessed that the debt service bill could rise to Rs 8.56 trillion, but now with the move towards longer maturity T-bills and bond issuance at lower policy rates, it was expected that the overall debt Service bill Rs. It could be as low as Rs 8.3 trillion.

The Monetary Policy Committee (MPC) meeting of the State Bank is going to be held on December 12 with the expectation that a downward trend may be seen in it.

Previous auctions conducted by the Finance Ministry and the SBP had also raised hopes that the rates on treasury bills were in the range of around 21.5%, suggesting that the market may be taking a downturn considering the lower rates accepted for this week’s latest auction. Was expecting.

Pakistan is also anxiously awaiting the US Federal Reserve meeting as the policy rate is the highest in the last 22 years between 5.25 to 5.50%, prompting Islamabad’s economic managers to launch their plan to launch international bonds to bring in $1.5 billion. Was forced to postpone.

If the policy rates in the United States are reduced in the coming months, Islamabad may consider launching ESG bonds in the second half of the current fiscal year. All these developments will impact the budgetary side of Pakistan, as the decline in global interest rates as well as in the domestic market will help in reducing the cost of debt service bill in Pakistan during the current financial year.

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