IMF told Pakistan, no compromise on targets set under loan agreement

A man walks past a board bearing the IMF logo.  - Reuters/File
A man walks past a board bearing the IMF logo. – Reuters/File
  • The IMF mission had reached Pakistan a day earlier for talks on the second review.
  • The IMF delegation appreciated the steps taken by Pakistan so far.
  • The Finance Minister says that the goals of IMF will be implemented.

ISLAMABAD: The International Monetary Fund (IMF) has made it clear to Pakistan that it needs to meet the targets set under its $3 billion standby agreement with the global lender, sources said. geo news on Thursday.

The IMF mission led by Nathan Porter had arrived in Pakistan a day earlier to lead two-week-long talks on the second tranche under the SBA.

According to sources, acting Finance Minister Dr Shamshad Akhtar, State Bank of Pakistan Governor Jameel Ahmed and FBR officials met the IMF delegation today for an introductory session.

The officers I spoke to geo news Speaking on condition of anonymity, he said the IMF delegation appreciated the steps taken by Pakistan but stressed that Pakistan will have to strictly implement all the targets.

Dr Akhtar assured the IMF that the targets under the loan program are being implemented and all the conditions of the IMF have been implemented so far.

news The news comes a day after the Finance Ministry assessed progress on key targets, including the disbursement of Rs 87.5 billion in cash transfers to beneficiaries under the Benazir Income Support Program (BISP).

The IMF, under the quantitative performance criteria, had capped the amount of the target relating to government guarantees at Rs 4,000 billion, but the ministry was able to limit the total guarantees to Rs 3,853 billion by the end of September 2023. The subject of contention in the review talks will be Pakistan’s external financing needs.

The functioning of the foreign exchange market may also become a problematic issue as the IMF withdrew the circular in December 2022 on priority in providing foreign exchange for certain types of imports introduced under a structural benchmark. It was placed under the structural benchmark because the IMF wanted to ensure “full market determination of the exchange rate”.

The Finance Ministry had taken note of the progress towards quantitative performance criteria, sustained performance criteria, indicative targets and structural benchmark conditions agreed with the IMF for the end-September 2023 under the $3 billion SBA programme.

The government also kept the power sector’s circular debt within the envisaged range as it increased by Rs 227 billion in the first quarter and reach Rs 2.5 trillion by the end of September 2023.

“The target of increasing circular debt has been successfully achieved, which was agreed with the IMF under the revised Circular Debt Management Plan (CDMP),” an official told The News on Monday.

Regarding cash transfers to beneficiaries under BISP, the official said the government has distributed Rs 89 billion so far against the estimated target of Rs 87.5 billion by September 2023. He said the unconditional and conditional cash transfers were “within the desired target”.

The official said the next installment will be disbursed under BISP in November 2023, after which the cumulative disbursement under the program will reach Rs 185 billion. The government has allocated a disbursement target of Rs 460 billion for BISP in the current financial year.

Meanwhile, State Bank of Pakistan (SBP) officials said they are on track to meet the minimum threshold for net international reserves (NIR), which they said will be negative $14.5 billion by the end of September 2023.

The net government budgetary borrowing limit from the SBP at the end of September 2023 was Rs 4,078 billion as the government borrowing from the central bank remained zero.

FBR’s indicative target of collection has been achieved as the net tax revenue collected by FBR by the end of September 2023 was envisaged to be Rs 1,977 billion. The net accumulation of tax refund arrears stood at Rs 32 billion.

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