Agreement reached with IMF, Pakistan to receive $1.17 bln soon

IMF Pakistan

ISLAMABAD: Pakistan and the International Monetary Fund (IMF) have reached an agreement on policies to complete the combined seventh and eighth reviews of Extended Fund Facility (EFF).

Under the agreement, Pakistan would receive $1.17 billion soon, tweeted Federal Minister for Finance and Revenue, Miftah Ismail here Thursday.

The Minister thanked Prime Minister, fellow ministers, secretaries and especially the finance division for their help and efforts in obtaining this agreement.

Agreement reached with IMF, Pakistan to receive $1.17 bln soon: Miftah

Earlier, in a statement issued from Washington, IMF said its staff and the Pakistani authorities have reached a staff level agreement (SLA) on policies to complete the combined 7th and 8th reviews of Pakistan’s Extended Fund Facility (EFF).

“The IMF team has reached a staff-level agreement (SLA) with the Pakistan authorities for the conclusion of the combined seventh and eight reviews of the EFF-supported program,” the statement said.

According to the statement, an IMF team, led by Nathan Porter finalized discussions for the combined seventh and eight reviews.

The agreement is subject to approval by the IMF’s Executive Board, following which about $1,177 million (SDR 894 million) will become available, bringing total disbursements under the program to about $4.2 billion.

Additionally, in order to support program implementation and meet the higher financing needs in FY23, as well as catalyze additional financing, the IMF Board will consider an extension of the EFF until end-June 2023 and an augmentation of access by SDR 720 million that will bring the total access under the EFF to about US$7 billion.

“Pakistan is at a challenging economic juncture. A difficult external environment combined with procyclical domestic policies fueled domestic demand to unsustainable levels. The resultant economic overheating led to large fiscal and external deficits in FY22, contributed to rising inflation, and eroded reserve buffers,” it said.

To stabilize the economy and bring policy actions in line with the IMF-supported program, while protecting the vulnerable, policy priorities include Steadfast implementation of the FY2023 budget.

The budget aims to reduce the government’s large borrowing needs by targeting an underlying primary surplus of 0.4 percent of GDP, underpinned by current spending restraint and broad revenue mobilization efforts focused particularly on higher income taxpayers.

Development spending will be protected, and fiscal space would be created for expanding social support schemes. The provinces have agreed to support the federal government’s efforts to reach the fiscal targets, and Memoranda of Understanding have been signed by each provincial government to this effect.