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Saturday, May 25, 2024

IMF mission reports substantial advancements achieved

IMF and Pakistan make significant strides towards an economic reform agreement under the Extended Fund Facility, aiming to bolster Pakistan's economy through comprehensive policy measures and financial support.

The IMF has reported significant progress towards finalizing a staff-level agreement with Pakistan, aimed at implementing a comprehensive economic policy and reform program under the Extended Fund Facility (EFF) bailout. Highlighting the ongoing discussions, the IMF emphasized their focus on addressing various aspects, including financial support from both the IMF and Pakistan’s bilateral and multilateral partners.

This development follows extensive deliberations spanning 11 days from May 13 to 23, concentrating on the proposed $7-8 billion 24th bailout installment within a 36-39 month EFF framework. Throughout these talks, the IMF delegation collaborated closely with Pakistan to shape a domestically formulated economic program. These plans build upon prior stabilization efforts realized through a nine-month Standby Arrangement (SBA), which initially provided $3 billion, supplemented by contributions from other lending entities.

Read more: “Negotiating Tomorrow: Pakistan Engages IMF for a Fresh Economic Path”

The overarching objective of the reform program is to facilitate Pakistan’s transition from economic stabilization to resilience, enabling the country to surmount various challenges. Pakistan aims to achieve this transformation by enhancing its financial management, augmenting domestic revenue generation, boosting investments in education and healthcare, ensuring the efficient operation of the energy sector, stabilizing prices, improving public services, and fostering business expansion.

In a significant policy shift, the government has opted to discontinue subsidies to fertilizer plants for gas, redirecting these resources towards direct support for farmers. Discussions with the IMF have revolved around implementing economic adjustments, particularly in utility pricing, with a stipulated deadline of June 25 to enact these changes and secure further financial assistance.

Read more: IMF Demands Massive Tax Hike for Pakistan’s Economic Revival

Looking ahead, the IMF mission endeavors to announce a staff level agreement by late June or early July, contingent upon the successful execution of tariff adjustments, initiation of reform measures, and endorsement of policy initiatives. Key focal points encompass tax reforms, elimination of caps on petroleum development levies, introduction of carbon taxes, elevation of natural gas prices, and management of mounting payments and debts within the power sector.