ISLAMABAD: The International Monetary Fund (IMF) announced on Wednesday a staff-level agreement with Pakistan, marking the completion of the first review of the $3 billion bailout package. The agreement comes as Islamabad assured the IMF of refraining from intervening in the currency market and staying on the path of fiscal consolidation.
Nathan Porter, the IMF’s mission chief to Pakistan, stated, “The IMF team has reached a staff-level agreement with the Pakistani authorities on the first review of their stabilization programme supported by the IMF’s $3 billion.”
The agreement, subject to approval by the IMF’s executive board, will lead to the disbursement of approximately $700 million or SDR 528 million, bringing the total disbursements under the program to nearly $1.9 billion.
During the two-week-long talks, discussions covered various aspects, including governance and transparency in managing assets under the Sovereign Wealth Fund and the operations of the Special Investment Facilitation Council (SIFC). The IMF urged greater transparency in these areas.
Pakistan also committed to making public the asset declarations of cabinet members, and a comprehensive review of the country’s anti-corruption framework will be conducted by a task force.
The IMF emphasized the need for continued fiscal consolidation in Pakistan to reduce public debt while protecting development needs. The country aims to achieve a primary surplus of at least 0.4% of GDP in FY24.
Additionally, Pakistan pledged to “complete the return to a market-determined exchange rate,” as the IMF expressed concerns about administrative actions influencing the rupee. The country plans to strengthen the transparency and efficiency of the foreign exchange market.
Despite the finance ministry’s apprehension about media coverage, the talks concluded smoothly. Pakistan assured the IMF of additional taxation measures if the Federal Board of Revenue falls short of monthly targets. The country also committed to aligning monetary policy with inflationary trends.
While acknowledging positive developments, the IMF highlighted the need for proactive monetary policy to lower inflation toward its target. Continued vigilance was advised to safeguard the soundness of Pakistan’s banking system.
The IMF’s statement outlined the country’s susceptibility to external risks, including geopolitical tensions, commodity price fluctuations, and tightening global financial conditions. Efforts to build resilience were deemed essential.
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