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IMF board approves $7bn loan programme for Pakistan [Post Updated #474]

Witness, the Clown of Pakistan.

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Finance Minister Ishaq Dar said on Tuesday that the government was working to find a mechanism to get the full $2.6 billion in pending finances under a loan programme with the International Monetary Fund (IMF).

The minister’s statement comes as Pakistan continues to negotiate with the IMF for the completion of a ninth review of the $6.5 billion Extended Fund Facility agreed in 2019 and the release of a $1.2bn tranche.

With reserves at critical levels for the past several months, Pakistan was expected to get around $1.2bn from the IMF in October last year. But almost 8 months later, that tranche has not materialised as the IMF says Pakistan has been unable to meet important prerequisites.

Just weeks away from the programme’s expiry on June 30, the package’s ninth review is still in doldrums while the tenth review for the release of the remaining amount, which was originally part of the plan, seems all but out of question.
 
Pakistan, IMF Mull $2.5 Billion Standby Aid, Dawn Says

Pakistan is in talks with the International Monetary Fund for a new $2.5 billion quick standby assistance as the existing program expires on June 30, the Dawn newspaper reported on Wednesday. Haidi Stroud-Watts reports on Bloomberg Television
 
The International Monetary Fund (IMF) has reached a staff-level pact with Pakistan on a $3 billion stand-by arrangement, the lender said, a decision long awaited by the South Asian nation which is teetering on the brink of default.

The deal — subject to approval by the IMF board in July — comes after an eight-month delay and offers some respite to Pakistan, which is battling an acute balance of payments crisis and falling foreign exchange reserves.

The $3bn funding, spread over nine months, is higher than expected for Pakistan. The country was awaiting the release of the remaining $2.5bn from a $6.5bn bailout package agreed in 2019, which expired on Friday.
 
It is good news for now. It was the need of the hour, but as always this is a loan that needs to be paid back.
 
I love the naaaak raggrnay waali kaam done by IMF. crooks needs to be shown the place.
 
Not sure how this is good news. Pakistan is simply going deeper and deeper into debt. There is no way out of this. I'm sure there must've been some extra conditionality with respect to reduction in subsidies and tax hikes etc.

The common man is already suffering from 40 % inflation. This is going to be brutal.
 
Not sure how this is good news. Pakistan is simply going deeper and deeper into debt. There is no way out of this. I'm sure there must've been some extra conditionality with respect to reduction in subsidies and tax hikes etc.

The common man is already suffering from 40 % inflation. This is going to be brutal.

Eh. Somebody always bails out Pakistan.

But they really need to wake up or long term difficulties will be brutal.
 
Extremely lucky as expected, Pakistani Establishment consistently takes bad decisions but still gets bailed out like that special son of Asia.

Opposite of Sri Lanka and Africa.
 
Extremely lucky as expected, Pakistani Establishment consistently takes bad decisions but still gets bailed out like that special son of Asia.

Opposite of Sri Lanka and Africa.

It won't last forever. Pakistan will not exist in 30 years. Sad but true.
 
This govt has 1.5 month left in power. They will not make any of the reforms they agreed to right before an election is coming.
 
Tax the rich to protect the poor, IMF chief tells Pakistan
Kristalina Georgieva meets Interim PM Kakar on sidelines of UNGA
International Monetary Fund (IMF) Managing Director Kristalina Georgieva has advised Pakistan to tax the wealthy and protect the poor.

Speaking to a Pakistani private media channel after her meeting with Interim Prime Minister Anwaarul Haq Kakar on the sidelines of the United Nations General Assembly (UNGA) on Thursday, Georgieva said "what we are asking in our programme is that please collect more taxes from the wealthy and please protect the poor people of Pakistan".

Her comments come amid soaring inflation in Pakistan after the country secured a last-minute bailout from the Fund last July.

“Of course, it is difficult but Pakistan has to do it in line with the IMF programme as we stand by the people of Pakistan,” she said.

 

IMF wants immediate raise in gas prices and that too with effect from July 1​


As the people in Pakistan are already fed up with the record-high and sustained inflation, the International Monetary Fund (IMF) has conveyed its annoyance over not increasing the gas prices – a move that will only worsen the existing cost-of-living crisis.

According to sources, the IMF says not raising the gas tariffs from July 1 is a violation of the $3 billion agreement signed by Pakistan after the expiry of the previous programme on June 30.

The current nine-month deal, which will end on March 31 next year, carries strict conditions including increase in fuel prices, gas and power tariffs, and let the market decide the dollar exchange rate without any government or State Bank of Pakistan intervention.

As a result, the people are experiencing a sustained inflation rate which is increasing further amid the rising prices and rupee depreciation. However, the government crackdown on money markets has raised some hope that the inflation might be controlled in the longer-run.

The IMF has told Islamabad, the sources in finance ministry say, that the two gas distribution companies – Sui Northern and Sui Southern – have faced a Rs46 billion loss because the tariffs were not modified with effect from July 1.

And the IMF hasn’t stopped there as it suggested Rs46bn should also be recovered from gas consumers, meaning the price increase must be effective from July 1, thus forcing the inflation-hit people to pay massive bills in the coming months.

On their part, the sources say the finance ministry officials informed the IMF that Caretaker Finance Minister Shamshad Akhtar will return to Pakistan from Beijing Thursday (today) after which progress could be made on the matter.

The issue of gas tariff is of great significance as the IMF is set for the second review of the current programme and the release of the next tranche depends upon Pakistan meeting its conditions.

 

Pakistan approves major natural gas price hike to meet key condition ahead of IMF review​


KARACHI: Pakistan’s caretaker government has given a go-ahead for a substantial rise in the gas tariff to meet a key condition of the International Monetary Fund (IMF) ahead of the first review of a $3 billion bailout facility, financial experts said on Tuesday.

The hike in gas tariffs was approved by the Economic Coordination Committee (ECC) of the federal cabinet that was chaired by Caretaker Finance Minister Dr. Shamshad Akhtar on Monday.

The move is likely to impact millions of people across Pakistan, which has faced a number of energy-related issues in recent years.

“A summary submitted by the Ministry of Energy (Petroleum Division) regarding the revision of the natural gas sale pricing for the FY 2023-24, was also considered by the forum,” said an official statement circulated after the meeting.

The gas tariff for non-protected domestic consumers would increase by up to 173 percent, commercial by 136 percent, export industry by 86 percent, non-export industry by 117 percent, fertilizer by 14 percent, and CNG by 144 percent, according to the summary.

There will be no increase in tariff for the protected category (57 percent of the domestic consumers) however, the fixed monthly charge is proposed to be increased from Rs10 to Rs400 for this category. The new gas tariff will be implemented from November 2023, instead of October 2023.

The recommendation will now be presented before the federal cabinet for final approval, after which the Oil and Gas Regulatory Authority (OGRA) will issue a notification regarding the revision of the tariff, an OGRA spokesman told Arab News on Tuesday.

After the approval, the average gas price is expected to go up by 53 percent to Rs1,397/MMBtu from Rs914/MMBtu, according to a report by Arif Habib Limited (AHL), a Pakistani securities brokerage, investment banking and research firm.

“The revenue impact of the proposed price hike would be Rs57 billion,” AHL said. “As per the estimates the revenue requirement of Sui Southern Gas company (SSGC) and Sui Northern Gas Pipeline (SNGPL) is Rs697 billion, while [their] annual revenue would be Rs755 billion with the tariff hike.”

Pakistan is bracing for the upcoming first review of the $3 billion short-term financing facility it availed from the IMF to stave off a looming default in July this year. The Fund’s team is expected to visit the South Asian country for the review by the end of this month.

The IMF has frequently raised concerns over the country’s mounting circular debt in the energy sector, asking the government not to give any subsidies while calling for raised tariffs.

“It was one of the key conditions of the IMF which the government has met,” Tahir Abbas, head of research at AHL told Arab News. “With this last major hurdle removed, we expect that the review of the $3 billion program will be smoothly completed. The government has already achieved other major targets.”

Pakistan has faced a number of energy woes in recent years, including frequent gas shortages in the winter season. The problem not only creates hardships for domestic consumers but also affects local industries by bringing down their production levels.

It is pertinent to mention here that Pakistan’s oil and gas reserves have been fast depleting and are likely to be fully consumed in the next 15 years, according to the Pakistan Petroleum Information Services.

The country has not made any major new discovery of oil and gas reserves and the government has been looking for cheaper sources of energy imports to meet the growing demand.

 
‘Confident’ Pakistan to meet IMF for review talks on Nov 2
Staff-level agreement will pave way for approval of second loan tranche of $710m by the IMF board in Dec

ISLAMABAD:
The International Monetary Fund (IMF) has agreed to begin talks from Nov 2 for the release of $710 million second loan tranche, as the government remains confident that it will successfully complete the programme review amid some external sector challenges.

A clarity on next general elections date can further strengthen the hands of the Ministry of Finance during the upcoming review talks for the July-September period of this fiscal year, although the IMF has not explicitly attached any such condition.

An IMF team led by Nathan Porter will field a mission to Pakistan starting on Nov 2 on the first review under the current Stand-By Arrangement (SBA) of $3 billion, Esther Perez, the resident representative of the IMF, told The Express Tribune.

The IMF had proposed Nov 7 in anticipation of a delay in compiling the first quarter data but the Ministry of Finance assured that all the relevant data was available for the review talks, according to sources.
The first review talks will be held for the second loan tranche of $710 million and a staff-level agreement would pave the way for its approval by the IMF board in December. While approving the $3 billion loan in July this year, the IMF had also released the first tranche of $1.2 billion.

The federal government and the State Bank of Pakistan remain hopeful that they would comfortably complete the review on back of meeting the conditions agreed with the IMF in July.

However, the external financing gap remains a hard area for the government, as the Ministry of Finance’s internal assessment shows a wide gap between the loans planned to be received and the actual disbursements during the current fiscal year.

Only on account of Eurobonds and the foreign commercial loans, the government has recently estimated a shortfall of $4.5 billion. The hole is even bigger than this while taking into account shortfall against some other projected disbursements.

The exchange rate management and the monetary policy stance are the other two areas that would be minutely reviewed by the IMF, a senior government functionary said on Tuesday.

 
Negotiations between Pakistan and the International Monetary Fund (IMF) for a new tranche of $700 million will be held in the first week of November.

According to details, negotiations between Pakistan and the International Monetary Fund (IMF) for the new tranche of the current loan program will begin in the first week of November.

Sources said that the new round of negotiations for obtaining the installment of 700 million dollars is going to be held in November.

Economic performance from July to September will be reviewed in talks with the IMF, the economic performance data for the first quarter of the current fiscal year has already been provided to the IMF.

Sources said that the talks will discuss power sector reforms and review the implementation of procedures to reduce circular debt and also discuss management to reduce gas circular debt.

According to the sources, measures to reduce the fiscal deficit and current account deficit, including implementation of tax reforms, measures to reduce the losses of government institutions will also be reviewed.

Source: ARY
 
Caretaker Finance Minister Dr Shamshad Akhtar has said that the International Monetary Fund (IMF) team will arrive in Pakistan on November 2.

“We have effectively implemented the IMF programme for the first quarter. We will tell them that we are on track in the programme. Then we have to leave it to God to help us out,” she said while addressing a news conference in Karachi on Saturday.

The finance minister went on to add that the caretaker government has worked on fast-tracking the implementation of reforms asked by the IMF and different programmes of the World Bank.

“The Federal Board of Revenue has collected higher tax in the first quarter than the IMF target. I always ask the FBR to collect more tax. We have also developed reforms for state-owned enterprises which will be implemented,” she said.

“We are not looking only for IMF programme. We are trying to stabilise the country’s economy,” she added.

Source: AAJ News
 

'Temporarily' sigh of relief as interim govt decides against increasing gas tariff​


ISLAMABAD: The caretaker government Monday temporarily decided against increasing the gas tariff providing much-needed relief to the people who are facing the brunt of skyrocketing utility bills amid ballooning inflation in the country.

During a cabinet meeting chaired by Caretaker Prime Minister Anwaar-ul-Haq Kakar, the executive body also directed the relevant authorities to review the gas price hike that was scheduled to be implemented on November 1.

It is pertinent to mention that following the International Monetary Fund's(IMF) demand to address the energy sector's increasing circular debt, the Economic Coordination Committee (ECC) last week approved a massive tariff hike of up to 193% last week.

In the case of the cabinet's approval today, non-protected domestic consumers would have seen the gas tariff increased up to 173%, 136.4% for commercial, 86.4% for export, and 117% for the non-export industry.

Following the ECC's nod, the fixed monthly charges for protected consumers were increased from Rs10 to Rs400, for non-protected from Rs460 to Rs1,000 and for higher slabs up to Rs2,000.

Additionally, according to sources, the cabinet also approved the "Hajj Policy 2024" along with the establishment of an "anti-human smuggling station" by the Federal Investigation Agency (FIA).

The forum also made key decisions pertaining to the implementation of the caretaker government's decision to expel illegal foreigners residing in the country after the November 1 deadline.

The police, along with other authorities concerned have been directed to apprehend illegal foreigners residing in the country, the sources added.

Furthermore, convicted aliens, those involved in minor offences along with the ones under trial will also be deported.

Meanwhile, illegal foreigners involved in heinous crimes will not be expelled.

 

Pakistan hopeful of successful IMF review​


The caretaker government is hopeful of successfully concluding the upcoming review of the International Monetary Fund (IMF) scheduled next month, interim Prime Minister Anwaar-ul-Haq Kakar said Tuesday.

An IMF mission led by Nathan Porter will visit Pakistan from November 2-16 to discuss the first review of the country's current $3 billion standby arrangement (SBA).

Pakistan is trying to navigate a tricky path to economic recovery under a caretaker government in the wake of an IMF loan programme, approved in July, that helped avert a sovereign debt default.

Under the programme, the country received $1.2 billion from the IMF as the first tranche in July.

“We have achieved the targets and the revenue targets have been met. We are quite comfortable that our negotiations for the second tranche will conclude very successfully,” the interim prime minister told the journalists.

On inflation, the interim prime minister said that it would be “unfair” if someone says that there has been no decline in the inflation rate.

He added that he had received reports of a decline in the prices of essential items which he said was because of the appreciation of the rupee against the dollar and a decrease in the price of petroleum products.

The PM also asked journalists to calculate the impact of the local unit's appreciation against the greenback on the circular debt. He shared that the strict actions against the smuggling taking place through the Afghan transit trade had helped the local industry as productivity was back on track.

The PM said due to the smuggling the local mills, which he used as an example, were unable to compete against smuggled items and were forced to shut down.

“These are all indicators that are going positive,” said Kakar.

 
The details of the conditions fulfilled by the International Monetary Fund (IMF) by Pakistan have been revealed, which include tax collection, increase in electricity and gas prices, limitation of budget deficit and increase in petroleum levy.

According to the details, it has been said in the statement from the Ministry of Finance that the important targets for the first quarter review of the financial year have been achieved, the tax collection condition of the IMF for July to September has been fulfilled, the FBR has collected 2041 billion against the target of 1978 billion. Collected tax of Rs.

Sources said that from July to September, FBR did not issue any tax amnesty scheme and collected 222 billion rupees in levy, while BR did not give any new tax exemption.

Sources said that the basic electricity tariff has been increased by Rs 7.50 paise per unit, increasing the gas tariff by almost 200% from November 1.

The Ministry of Finance said that in the first quarter of the financial year, the condition of limiting the budget deficit was fulfilled, the increase in the circular rate of the power sector was also less than the IMF target.

According to the sources, the IMF allowed an increase in the circular rate up to 292 billion rupees for July to September and in the same period, the circular rate of the power sector increased by 227 billion rupees to 2537 billion rupees.

Sources said that the IMF target related to restructuring of sovereign guarantees was achieved but no supplementary grant was released in the first quarter of the financial year.

Apart from this, the petroleum levy on petrol was increased to the upper limit of Rs.60 per liter, the target of expenditure of Rs. 465 billion on health and education in the provinces was also achieved.

Source: ARY
 
IMF talks uncover major gaps

Govt seeks assistance over and above current IMF programme

Pakistan has informed the International Monetary Fund (IMF) that the debt servicing cost may rise to Rs8.5 trillion, marking a slippage of Rs1.2 trillion over the allocated budget. Challenges persist in arranging approximately $6.5 billion in external debt this year due to challenging economic conditions.

Pakistani authorities have now requested the Fund’s assistance in bridging the external financing gap, which remains despite the IMF programme, according to sources from the Ministry of Finance.

Excessive expenditures on interest payments and difficulties in raising external debt due to unfavourable domestic and global economic conditions are the two major issues in the ongoing talks for the $710 million loan tranche. The challenges in arranging the $6.5 billion debt represent nearly one-third of the planned borrowings for this fiscal year. The $6.5 billion amount may come down to $5.5 billion if Chinese timely finance their maturing loans in May-June next year, said the sources.

The discussions on domestic debt and external financing requirements were shared with the IMF during the second day of technical-level talks.

The IMF raised questions and will share its assessment next week, according to sources. However, the IMF staff observed that Pakistan’s budget deficit would rise far higher than the estimated one due to the growing cost of debt servicing, according to government sources.

Discussions also took place concerning the debt management office. Sources noted that the IMF expressed concerns about an understaffed office, with many important positions vacant and much of the work handled by foreign-funded consultants.

In contrast to past practices where technical-level talks were led by the Finance Secretary, this time interim Finance Minister Dr Shamshad Akhtar also participated in the technical rounds.

The IMF was informed that the interest cost might rise to Rs8.5 trillion during the current fiscal year, representing a slippage of Rs1.2 trillion against the budget estimates of Rs7.3 trillion.

It was conveyed that efforts would be made to lower the projected Rs8.5 trillion cost by raising debt with one-year and six-month maturity profiles. This would shift some of the debt payments from this fiscal year to the next but would not significantly impact the overall debt cost.

Out of the Rs8.5 trillion debt cost, a substantial portion, over Rs7.5 trillion, was related to domestic debt servicing. The external debt servicing cost has now exceeded Rs900 billion, according to sources.

The global lender will now review these figures and provide its assessment of the revised budget deficit and the country’s external financing needs. Both sides are negotiating for a $710 million second loan tranche under the $3 billion short-term programme.

Qamar Abbasi, the spokesman for the Ministry of Finance, was asked to confirm the development and whether alternate plans to address high-interest payments and challenges in arranging the $6.5 billion in loans were also shared with the IMF. His response was awaited until the filing of this report.

The government had estimated interest payments at Rs7.3 trillion, assuming an 18% interest rate, but the central bank has already increased rates to 22%.

Sources indicated that the IMF’s perspective was that raising debt with 12-month treasury bills would only have an accounting impact, as the interest would still accrue in this fiscal year.

The IMF programme will conclude in April next year. In the last quarter of this fiscal year, Pakistan’s interest payments are estimated to be close to Rs2.9 trillion, including Rs2.6 trillion to domestic lenders.

During the first quarter of this fiscal year, the country paid Rs1.38 trillion in debt, nearly equal to the entire net federal income. Pakistan’s finance minister has expressed concern about the growing interest cost, considering it a primary issue for fiscal stability.

Due to the overshooting of interest payments, the projected federal budget deficit of Rs7.5 trillion could reach a new record of Rs8.7 trillion, even if all other estimates remain constant, according to sources.

On the lower than budgeted disbursement of foreign loans, the cost of budget deficit financing has entirely shifted to domestic sources. The government is also unlikely to receive budget cover for a significant portion of the IMF debt and the $1 billion UAE loan received in July this year.

In its July report, the IMF projected the cost of interest payments at Rs8.6 trillion, which is Rs1.3 trillion more than the annual budgeted figures. The Ministry of Finance is gradually realising and adjusting to the actual ground realities.

External financing issues

Sources noted that Pakistani authorities informed the IMF that the realisation of external loans of around $6.5 billion would depend on market conditions. Pakistan has requested the IMF’s assistance in arranging these loans. Earlier, the IMF played a role in obtaining loans from Saudi Arabia and the United Arab Emirates.

The IMF has been informed that raising foreign commercial loans, Eurobonds, and some debt from the Islamic Development Bank would depend on favorable market conditions. The Islamic Development Bank had committed to providing $1 billion in this fiscal year, but the entire amount may not materialise.

One option could be to increase the size of the current $3 billion loan programme, but this would require the IMF’s consent.

The government had estimated receiving over $20 billion in foreign loans from all creditors.

Sources mentioned that as opposed to earlier estimated external financing requirements of over $26 billion, the current needs are below $24 billion. Some needs have been reduced due to a lower than projected current account deficit, now estimated at $6.5 billion, and the rescheduling of Chinese loans.

The total rollovers of foreign loans, earlier estimated at $11 billion, have now been projected close to $12.5 billion, offsetting some of the projected shortfalls in external debt inflows.

Sources also noted that some of the shortfall would be compensated by reducing imports, further lowering the projected current account deficit.

They mentioned that the prospects for raising significant debt through Green Bonds are not very bright, although discussions on its rules have recently taken place at the Special Investment Facilitation Council (SIFC) level.

Express Tribune
 
Govt, IMF agree on backup steps in review talks

ISLAMABAD: The caretaker government and the International Monetary Fund (IMF) have reached a consensus on backup measures to activate by the year’s end if significant deviations from fiscal and monetary objectives threaten the broader aims of the ongoing $3 billion loan programme.

Informed sources told Dawn that a visiting mission of the IMF and the Pakistani authorities would be concluding technical-level discussions on Friday that involve an exchange of the latest data, not only limited to the end-September quarterly performance, and queries and clarifications on all macroeconomic areas and their forward-looking outcomes.

While formal policy-level talks are expected to begin on Monday, both sides agree on the future course of action, including expanding the scope of taxation on the retail sector and improving the targeting of real estate-based revenue collection in case of any shortfall.

A fixed taxation scheme for retailers could be the first shot in the arm in case of a minor revenue gap, to be followed by real estate, through an ordinance with effect from Jan 1. Further clarity and specifics would emerge in policy discussions next week.

The sources said revenue targets aimed through import growth were the key concern for the IMF mission, as imports so far remain subdued than anticipated at the time of budget 2023-24 and the loan deal’s finalisation in July.

In any case, both retail and real estate sectors would be required to significantly increase their contribution to the revenue stream from their existing share with effect from July 1, 2024.

The sources said the two sides had no big issue on the need for curtailing development spending during the current year both at the federal and provincial levels, but effective taxation on agriculture income remains out of the caretaker government’s agenda given constitutional limitations, although the IMF mission has not given up flagging its importance.

In August, the government shared with the IMF a revised plan for managing the power sector circular debt, besides rebasing annual tariffs and streamlining monthly and quarterly fuel adjustments, including that of the private power utility K-Electric. This meant no fresh flow to the circular debt, which had gone beyond Rs2.5 trillion by the end of September.

“Luckily, no major issue has emerged so far for the power sector this time,” an official said, hoping that policy-level talks with the IMF would remain smooth.

However, the government may have to make proper allocations to solarise tube wells in next year’s budget to further cut down on subsidies.

The policy-level talks next week would also suggest if the IMF had any problem with external financing needs that Pakistani authorities plan to meet through significantly higher foreign direct investment (FDI).

The government aims to attract this investment from friendly nations — particularly in mines and minerals, agriculture, aviation and energy sectors — through the newly created civil-military forum, the Special Investment Facilitation Council (SIFC).

The authorities are expecting such FDI — both through greenfield investment and brownfield through privatisation — to get impetus by January next year, given the advanced stages of negotiations on an umbrella trade treaty with Gulf nations and bilateral agreements.

Also, they anticipate improved market conditions for the international capital market and commercial financing based on the successful completion of the IMF review and the disbursement of the second loan tranche, worth over $710 million, of the current loan programme ending in late March next year.

Officials said the caretaker government has not only met the IMF’s requirement for no more government guarantees but had in fact outperformed by over Rs150bn by retiring some of the guarantees.

Likewise, it has also complied with no more borrowing from the central bank, while the gas sector’s circular debt had been stopped with the latest massive gas price hike notified with effect from Nov 1.

Questions are reported to have been raised on the exchange rate management leading to the rupee’s appreciation, but authorities have insisted that the change had been brought through administrative actions against smuggling and illegal operations and not through intervention.

The government and the IMF already have similar views on containing the development programme both at federal and provincial levels for fiscal tightening to minimise budget deficit and consolidate primary fiscal surplus. They plan to wrap up the review by Nov 16.

Earlier, the authorities had briefed the IMF team about the consultative process with provincial governments for not only slashing the federal funding to provincial projects but also the need to limit the Public Sector Development Programme (PSDP) of the federation and annual development plans (ADPs) of the provinces.

Pakistan has to achieve primary surplus — the difference between total revenues and expenditures except interest payments — at 0.4 per cent of GDP (about Rs400bn) based on Rs600bn cash surpluses to be returned to the federal government by the provinces.

The government has already crossed Rs416bn primary surplus in the first quarter of this fiscal year. The provincial cash surpluses did not materialise in the first quarter as planned, but the trend would reverse going forward.

The major achievement on primary balance had come through a tight squeeze on PSDP and subsidies, as total spending in the first quarter stood at less than Rs41bn against a full-year budget allocation of Rs950bn.
DAWN NEWS
 
Policy-level discussions between Pakistan and the International Monetary Fund (IMF) for the upcoming tranche valued at $710 million began on Monday.

The policy-level talks come after a round of technical-level talks and are expected to last three days.

Representatives from the Special Investment Facilitation Council (SIFC) will provide the IMF with a briefing on the initial day of the policy-level discussions.

The talks will involve a comprehensive dialogue on the anticipated direct investment through SIFC, with considerations also extending to other matters such as tax concessions related to investments under SIFC.

As per insiders from the Ministry of Finance, Dr Shamshad Akhtar, the caretaker finance minister, will lead Pakistan’s economic team in the policy-level discussions, while Nathan Porter, the head of the mission, will lead the IMF review mission.

Revenue generation, shrinking expenditures and dollar inflows policy will be the part of talks. The sources revealed that Pakistan will also share its plans such as exchange rate, renewal of loans, T-bill and issuance of investment bonds will come on the table as well.

Furthermore, lifting fuel subsidies amid loan programme and measures to reduce of budget deficit are included in the meeting discussion.

Rebasing, adjustments, and circular debt reduction plans for power sector and petroleum sector will also be discussed.

Source: AAJ News

 
IMF Managing Director Kristalina Georgieva has said that the second tranche of $3 billion under the Standby Arrangement (SBA) with Pakistan is expected to be signed this week.

According to the report of the foreign news agency Bloomberg, with the progress of the agreement, more funds can be opened for the South Asian country.

Kristalina Georgieva told Bloomberg Television in an interview in Singapore that she expects an agreement to be reached after the review is completed within this week, adding that Pakistani officials are particularly critical of sticking to the tough IMF program. The finance minister deserves praise.

When asked about the obstacles in the way of issuing installments, he said that the most important problem in the country is the decrease in tax collection.

He said that today only 12 percent of the country's GDP is collected in taxes, we are saying that tax collection should be at least 15 percent to sustain your economic activities.

Kristalina Georgieva recommended to the government that tax should be collected from those who can pay tax in Pakistan.

It is to be noted that this confirmation by the top official is the IMF's commitment to Pakistan under the Special Investment Facilitation Council (SIFC) against creating or distorting the group of preferred investors in the country and transparency in its business dealings. It comes after being advised to ensure accountability.

The IMF Executive Board approved a 9-month standby arrangement program for Pakistan in July, with $1.2 billion disbursed immediately after approval.

Pakistan will receive the second tranche of $710 million early next month after the Executive Board approves the successful completion of the second quarter review.

The IMF technical staff began a review of the short-term loan agreement on November 2, which ended on November 10.

Informed sources told Dawn that the IMF and Pakistani officials covered most of the areas during the policy-level talks and there remained objection on a single point.

It is being reported that the two sides exchanged successive details to finalize the Memorandum of Economic and Fiscal Policies (MEFP) yesterday and the talks are expected to reach a positive conclusion today.

Source: Dawn
 
The IMF is demanding a 15 percent tax collection to sustain economic activities. How will poor people in Pakistan bear this burden? Why can't these rich politicians pay off these hefty taxes from their treasures?
 
The International Monetary Fund (IMF) has reached a staff-level agreement with Pakistan on the first review of a $3 billion bailout, where the country will receive $700 million after approval from IMF's Executive Board, the organisation said on Wednesday.

Source: Express Tribune

 

IMF deal boosts Pakistan's financial markets​


Following the staff-level agreement between Pakistan and the International Monetary Fund (IMF), the Pakistan Stock Exchange's (PSX) benchmark KSE-100 index rallied past 57,000 points while the rupee also recovered against the dollar.

Pakistan, a day earlier, had reached a staff-level agreement with the IMF on the first review of a $3 billion bailout.

After approval from the Fund's Executive Board, Pakistan will have access to around $700 million, bringing total disbursements under the programme to almost $1.9 billion, the IMF announced in a statement on Wednesday.

Today, the rupee broke its 17-session losing streak after it gained Rs0.76 against the dollar and closed at Rs287.38 against the greenback in the interbank market at the close of the day, State Bank of Pakistan's data showed. The local currency had closed at Rs288.14 on Wednesday.

The benchmark KSE-100 index reached an intraday high of 57,549.26 points. However, it closed at 57,397.02 points after gaining 716.96 points or 1.26%, up from the previous close of 56,680.06 points.

In a conversation with Geo.tv, Dr Khaqan Hassan Najeeb, a former adviser of the finance ministry, said that the PSX buoyed due to the staff-level agreement with the IMF. He added that the $700 million from the global lender will help Pakistan make way for “much-needed” external financing.

“IMF’s approval means that the government has worked on fiscal consolidation as well as the change in energy prices which curtails the circular debt,” said Dr Najeeb.

The economist believes that the external financing “flow will give some comfort to the forex market as well as the supply side increase and the debt instruments including the financing from multilaterals, both program and project loans”.

He added that loans from bilateral and rollovers, friendly countries and commercial funds will start flowing in after the IMF agreement.

“The rupee will of course be determined by the kind of flows that we see and the kind of demand that is generated on the import side. In the long run, I always say the rupee parity with any foreign currency is a function of the productivity of the country,” said Dr Najeeb on the rupee’s appreciation.

Overall trading volumes increased to 1.25 billion shares. The value of shares traded during the day was Rs37.4 billion.

Shares of 385 companies were traded. Of these, 220 stocks closed higher, 147 fell, and 18 remained unchanged.

WorldCall Telecom was the volume leader trading in 386.3 million shares, gaining Rs0.19 to close at Rs1.59. It was followed by Cnergyico PK with 45.1 million shares, losing Rs0.04 to close at Rs4.70, and Pakistan Refinery Limited with 39.5 million shares, gaining Rs0.73 to close at Rs24.97.

Source: GEO
 

Minister warns of further hike in electricity, gas tariffs in Jan​


ISLAMABAD: It seems there will be no respite for the masses from high electricity and gas tariffs as interim Finance Minister Dr Shamshad Akhtar has said that the caretaker government plans to hike the prices of these utilities in January to curtail the circular debt issue, reported The News on Friday.

Addressing a press conference at the Q Block on Thursday, the federal minister said that under the International Monetary Fund’s (IMF) Stand-By Arrangement (SBA) the government has agreed to cut down the costs in the energy sector and restore efficiency.

“The circular debt of the power and gas sectors has crossed 4% of Gross Domestic Product. Urgent action is needed to bring it down. We have started work in this regard and electricity and gas rates have been adjusted accordingly,” she added.

Sharing more details about her talks with IMF, the finance minister said that she had informed the global lender about tariff revisions in the energy sector and the intention to impose extra taxes on various sectors, including real estate and retailers. However, she clarified that no final decision has been taken as of yet.

“Pakistan requires a fresh short-term IMF programme as the country cannot run without it keeping in view of the fragile macroeconomic stability,” Dr Akhtar said. She added that Islamabad would have to go for another medium-term programme probably under Extended Fund Facility (EFF) once the SBA ends.

On the question of the external financing gap, Finance Secretary Imdad Bosal was hopeful that the successful IMF review would unlock programme and project loans from multilateral lenders, including the World Bank (WB), Asian Development Bank (ADB), Asian Infrastructure Investment Bank (AIIB), and Islamic Development Bank (IsDB). He hoped that a reduction in the current account deficit would scale down the external financing requirement.

“There is no gap on the external financing front as processing of the programme loans from WB and ADB as well as co-financing from AIIB were at advanced stages and would now be approved in December this year,” he added.

The secretary added Islamabad was expecting Pakistan’s ratings to improve after the review which would help the government generate the desired dollar inflows in the shape of foreign loans.

The finance minister said the World Bank was expected to disburse $2 billion in loans during the current fiscal year. The foreign exchange reserves, she said, would build up next month after approval for $700 million tranche from the IMF, so the total disbursement would go up to $1.9 billion out of $3 billion under the SBA.

Dr Akhtar said the IMF’s Executive Board is expected to grant approval for the second tranche within a month.

Source: GEO
 
Government should find other ways to make money in order to return the loan to IMF. It shouldn't be by increasing prices of electricity, petrol, gas etc.
 
Average PSDP project takes 14.1 years in Pakistan: IMF
IMF assessed there were 244 new development projects included in PSDP with cost of Rs2,261.9bn during last financial year

ISLAMABAD: The International Monetary Fund (IMF) has assessed average time for completion of development projects in Pakistan stands at 14.1 years if no new projects are included in the Public Sector Development Programme (PSDP) list.

The IMF has come up with a technical assistance report titled ‘Public Investment Management Assessment (PIMA)’ for evaluating Pakistan’s development framework, which is expected to be launched soon.

The IMF assessed there were 244 new development projects included in the PSDP with an estimated cost of Rs2,261.9 billion during the last financial year 2022-23. The number of ongoing development projects was 909 with a total cost of Rs7,961.5 billion, it said. So, the average time for completion of a project stood at 14.1 years provided the development budget remained the same and no projects included into the PSDP.

While the Planning Commission gives funding priority to ongoing projects, reforms are needed to provide a more credible basis for the PSDP budget. The total cost of completion of ongoing projects, the “throw forward”, is very large compared to realistic funding available in the medium term.

It shows if the annual PSDP budget remains the same, and no new projects are added, it will take approximately 14 years to complete the existing approved projects. However, in practice new projects continue to be added at a significant rate.

In addition, the estimated years for completion is likely understated since i) ongoing projects not receiving funding in 2022-23 (known as unfunded projects) are not counted in the funding backlog, ii) the 2022-23 PSDP does not include flood-related projects that have been subsequently approved and iii) delays result in significant cost overruns.

The Planning Commission estimates a typical project requires 2-3 times its original estimated cost due to inflation, damage to work already done and loss of materials at inactive building sites, and increased builder costs – which Planning Commission attributes largely to funding-induced delays.

While the PSDP provides information on total project costs, this information would be more useful if compared to the realistic funding available in the medium term.

The IMF says the hybrid public investment efficiency gap in Pakistan is estimated at around 38 percent, which indicates there is considerable potential to improve the access and quality of its infrastructure. The hybrid efficiency gap is a measure of potential quality and access to infrastructure given the existing level of capital stock per capita.

 
Government should find other ways to make money in order to return the loan to IMF. It shouldn't be by increasing prices of electricity, petrol, gas etc.
Which will shoot up inflation.... Pakistan has been rescue by one world crisis or another from economic reckoning day. unforutunately for pak while there was deferment of payments, the debt never went away.

unless they hit an unprecendent of jackpot of epic proportions.... It wil be back to IMF
 
IMF board to approve staff-level agreement on Dec 7

ISLAMABAD: The Executive Board of the International Monetary Fund (IMF) is tentatively scheduled for Dec 7 to approve the Staff-Level Agreement (SLA) with Pakistan for the first review of the $3bn Stand-By Arrangement (SBA) leading to disbursement of about $700 million on Dec 8.

The IMF staff and the Pakistani authorities reached the SLA on Nov 15 in Islamabad, according to an end-of-mission statement. This will enable Pakistan to have access to SDR 528 million (around $700m). This will bring total disbursements under the nine-month $3bn SBA to almost $1.9bn.

A day later, Caretaker Finance Minister Dr Shamshad Akhtar announced shelving a $1.5bn Eurobond launch because of adverse global financial conditions and committed to keep regularly adjusting electricity and gas rates to avoid further flow of circular debt.

The IMF mission had called upon the authorities to return to the market-determined exchange rate and had highlighted risks that may arise because of geopolitical tensions, rise in commodity prices and difficult global financial conditions and advised the authorities to continue efforts to build resilience.

It also pointed out that timely disbursement of committed external support remains critical to support the authorities’ policy and reform efforts as the government was accelerating engagement with multilateral and official bilateral partners.

 
A technical team of the International Monetary Fund is expected to arrive in Pakistan next week to engage in discussions over tax and revenue related matters.

The IMF team will reportedly negotiate with officials from the Federal Board of Revenue for a week.

Expanding the tax net is expected to be a key point in the negotiations. Sources said that both sides will finalise measures to bring one million people into the tax net to take the total number of tax payers to six million.

The two sides will also prepare a basic structure for a scheme to tax retailers in the country, a sector that has traditionally resisted attempts at taxation.

The FBR will also discuss amendments in the tax policy with the IMF. The changes that both sides agree upon will be implemented in the upcoming budget.

An IMF delegation had left Pakistan after reaching an agreement over the first review in a stand-by agreement on November 16.

However, the release of the second tranche worth $710 million is still pending the IMF board’s approval.

Source: AAJ News

 
The International Monetary Fund (IMF) has not included Pakistan in the schedule of the Executive Board meeting to be held from December 12 to 14.

According to the details, the schedule of the IMF Executive Board meeting has been released, but the name of Pakistan is not included in the schedule from December 12 to 14 in the IMF Executive Board calendar.

Sources in the Ministry of Finance have said that the IMF Executive Board will approve an installment of nearly seventy billion dollars for Pakistan.

The sources of the Ministry of Finance say that they are hopeful for the IMF board meeting during this month, Pakistan will get the second installment under the short-term loan program of three billion dollars.

According to the sources, the funds will be released for Pakistan after the approval of the IMF board, the first review talks between Pakistan and the IMF have been successful.

Finance Ministry sources said that a staff level agreement was reached between Pakistan and the IMF last month.

Source: ARY
 
Pakistan's pending IMF approval for a substantial installment is a key economic development.But the absence from the upcoming board meeting schedule raises concerns for us as Pakistani nation.
 
The executive board of the International Monetary Fund (IMF) will meet on January 11 to give the final nod to disburse the next $700 million tranche to Pakistan under the $3 billion Stand-By Arrangement (SBA) inked by the Washington-based lender with the country, Bloomberg News reported on Thursday.

Last month, Pakistan and the IMF reached a Staff-Level Agreement (SLA) for the payment following the lender’s first review of the current programme.

In June this year, the IMF executive board approved the nine-month SBA, marking a significant achievement for Pakistan after its failure to revive the previous $6 billion programme on the same day.

The Washington-based lender’s executive board approved an immediate disbursement of $1.2 billion to Pakistan
in July 2023, with the rest to be handed over to the country subject to two quarterly reviews.

On November 15 this year, IMF Mission chief in Pakistan Nathan Porter announced that his team had reached an
SLA with the Pakistani authorities on the first review of their stabilisation programme.

He added that the agreement was subject to approval of the IMF’s executive board. “Upon approval, around $700 million … will become available bringing total disbursements under the programme to almost $1.9 billion,” he continued in a statement.

Previously, the finance ministry had anticipated a meeting of the IMF's executive board on December 7 to ratify the SLA with Pakistan.

However, the IMF’s executive board members were not available in the last week of December and the first week of January because of Christmas and New Year holidays.

The IMF’s schedule updated on Monday listed around 12 countries whose cases, both Article-IV consultations and programme reviews, were on the executive board agenda until December 14.

The schedule had raised eyebrows as Pakistan’s case was absent on the agenda.

However, after the release of the schedule, officials from the finance ministry said an SLA agreement between Pakistan and the IMF had been settled, meaning that the country could be included in the executive board's agenda at any point.

Recently, Porter expressed his satisfaction over the SLA with Pakistan, saying that the present interim government's policies reflected its commitment to stabilise the economy of the country.

"With that base, hopefully, we can build on and be able to move forward to the reforms to build a stronger, prosperous and inclusive Pakistan," he said at an event hosted by Pakistan's Ambassador to the US, Masood Khan, at Pakistan House for the representatives of international financial institutions (IFIs) -- the IMF, International Finance Corporation, World Bank, and Multilateral Investment Guarantee Agency.

Source: Express Tribune

 

Fitch affirms Pakistan at 'CCC', sees IMF deal completion​

Fitch Ratings Wednesday affirmed Pakistan's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'CCC' — and it typically does not assign outlooks to sovereigns with a rating of 'CCC+' or below.

In a statement, the rating company also said that it expects Pakistani authorities to complete the ongoing standby programme with the International Monetary Fund (IMF) — a crucial deal that kept the South Asian nation from defaulting on its sovereign debt.

However, an expert voiced concerns over the fresh rating, noting that he expected the company to improve Pakistan’s rating due to the slew of reforms that the caretaker government undertook to meet IMF’s requirements.

“One could have expected an improvement in the Fitch country rating for Pakistan after not only having joined a standby arrangement with the IMF but also completing the first review,” former adviser of the finance ministry Dr Khaqan Hassan Najeeb told Geo.tv.

However, he added that the uncertainties on the external front as well as the holding of the elections and any possible slippages on the fiscal side have kept Pakistan’s rating at ‘CCC’ as before.

In the statement, Fitch said the 'CCC' rating reflects high external funding risks amid high medium-term financing requirements, despite some stabilisation and Pakistan's strong performance on its current arrangement with the IMF.

The company said it expects elections to take place as scheduled in February and a follow-up IMF programme to be negotiated quickly after the current agreement finishes in March 2024,

“But there is still the risk of delays and uncertainty around Pakistan's ability to do this. The elections could endanger the durability of recent reforms and leave room for renewed political volatility,” the ratings company warned.

With the IMF board to meet on January 11 to discuss Pakistan’s loan approval, Fitch said it is expected that the process will be “unproblematic”.

“The successful programme review reflects continued fiscal consolidation, energy price reforms in the face of a public backlash, and moves towards a more market-determined exchange rate regime,” it said.

Policies and risks
Fitch expects it to go smoothly as the interim government has sharply hiked natural gas and electricity prices, cracked down on the black market, helped narrow the gap between the parallel (kerb) and interbank exchange rates, and brought more FX into the banking system.

In June, the previous government amended its proposed FY24 budget to introduce new revenue measures and cut spending, following additional tax measures and subsidy reforms in February.

Najeeb also said that the good part is that Fitch said Pakistan's reserves have recorded inflows of new funding and Pakistan, due to its limiting of the fiscal deficit, lower international prices, and limited ability to avail FX have resulted in Pakistan's CAD to shrink from the high $17 billion last year to nearly 1-1.5% estimated in FY24.

The company also noted that parties across the political spectrum in Pakistan have an extensive record of failing to implement or reversing reforms agreed with the IMF.

“We see a risk that the current consensus within Pakistan on the measures necessary to ensure continued funding could dissipate quickly once economic and external conditions improve, although Pakistan now has fewer financing options than in the past.”

“Any follow-up IMF programme would likely require Pakistan to undertake sweeping structural reforms in opposition to entrenched vested interests,” it added.

Najeeb added that the key message is to stay on “the IMF path, prepare for a new programme, but much more structural reforms in the areas of energy deregulation, investment and domestic revenue mobilisation would be required to consolidate the early signs of stability into more sustainable growth”.

Source: GEO
 
As a common man of Pakistan, I am not sure whether these IMF packages/deals are good for our country of not.
 
Pakistan’s total debt burden continued to rise and reached a whopping Rs 63,399 trillion, at the end of November in FY2023-24, ARY News reported on Friday, quoting an official report.

According to details, country’s total debt increased by over Rs12.430 trillion during the tenure of the PDM and the caretaker government.

Pakistan’s overall debt burden surged to Rs63.390 trillion including Rs40.956 trillion domestic loan and Rs22.434 trillion in international loans.

The report further said the country’s overall debt stood at Rs50.959 trillion in November 2022. The burden of the loan was recorded at Rs63.390 trillion in November 2023.

Earlier it emerged that Pakistan assured the International Monetary Fund (IMF) of the fresh loan programme.

According to the Memorandum of Economic and Financial Table, Pakistan has assured to increase Pakistan’s foreign reserves to $13.6 billion in FY2024-25 to avail of the new loan programme from the international lender.

Pakistan will seek a rollover of $6.34 billion loan in the next financial year, while the foreign investment will be jacked up by %1.31 bn, the MEFPT stated.

Source: ARY

 
The International Monetary Fund (IMF) executive board meeting for Pakistan will be held on Thursday in which the board is scheduled to consider the first review of Pakistan’s $ 3 billion stand-by arrangement (SBA), ARY News reported.

Finance Ministry officials said that Pakistan has achieved all IMF targets and hopefully will be able to get the required results. The officials said that Pakistan strictly implemented the economic reforms.

A first review under the $3 billion short-term loan program will be presented to the board while the IMF board will review the approval of the second tranche for Pakistan.

With the approval of the IMF board, Pakistan will get an installment of about 700 million US dollars.

It is pertinent to mention here that on 16th November last year, Pakistan and IMF reached a staff-level agreement on the first review under Pakistan’s SBA.

The agreement supports the authorities’ commitment to advance the planned fiscal consolidation, accelerate cost-reducing reforms in the energy sector, complete the return to a market-determined exchange rate, and pursue state-owned enterprise and governance reforms to attract investment and support job creation, while continuing to strengthen social
assistance.

It is pertinent to mention here that Pakistan is operating under a caretaker government after an IMF loan programme, approved in July 2023, helped avert a sovereign debt default.

Source: ARY

 
The International Monetary Fund (IMF) executive board meeting for Pakistan will be held on Thursday in which the board is scheduled to consider the first review of Pakistan’s $ 3 billion stand-by arrangement (SBA)

Finance Ministry officials said that Pakistan has achieved all IMF targets and hopefully will be able to get the required results. The officials said that Pakistan strictly implemented the economic reforms.

A first review under the $3 billion short-term loan program will be presented to the board while the IMF board will review the approval of the second tranche for Pakistan.

With the approval of the IMF board, Pakistan will get an installment of about 700 million US dollars.

It is pertinent to mention here that on 16th November last year, Pakistan and IMF reached a staff-level agreement on the first review under Pakistan’s SBA.

The agreement supports the authorities’ commitment to advance the planned fiscal consolidation, accelerate cost-reducing reforms in the energy sector, complete the return to a market-determined exchange rate, and pursue state-owned enterprise and governance reforms to attract investment and support job creation, while continuing to strengthen social assistance.

It is pertinent to mention here that Pakistan is operating under a caretaker government after an IMF loan programme, approved in July 2023, helped avert a sovereign debt default.

Source: Ary News
 
IMF board approves Pakistan’s first review, allows immediate disbursement of $700m

The International Monetary Fund (IMF) on Thursday completed its first review of Pakistan’s economic reform programme supported by a $3 billion Stand-By Arrangement (SBA) and allowed the immediate disbursement of $700 million, according to the finance ministry.

A statement from the ministry said the completion of the first review by the IMF’s Executive Board and the payment of 528m in special drawing rights brought the total disbursements under the SBA to $1.9bn.

“IMF funding along with recent inflows from multilateral lenders will further help the Pakistani rupee, that is fairly stable [over the] last few months,” said Mohammad Sohail, CEO of Topline Securities.

He added that this new tranche would help Pakistan in getting rollovers from allied countries such as the United Arab Emirates, China and Saudi Arabia and ease external debt repayment pressure.

In June 2023, the IMF Executive Board had approved the much-needed nine-month arrangement with Pakistan “to support its economic stabilisation programme”. The approval had allowed for an immediate disbursement of $1.2bn, with the rest to be phased over the programme’s duration — subject to two quarterly reviews.

The current IMF programme is expected to conclude in the second week of April. The initial tranche of $1.2bn was released in July.

In November 2023, a Staff-Level Agreement was reached between the IMF staff and Pakistani authorities regarding the first review under Pakistan’s SBA. This agreement was contingent upon approval by the IMF’s Executive Board.

Pakistan is now more likely to receive the remaining amount in March under the $3bn SBA.

However, caretaker Finance Minister Shamshad Akhtar had already informed the nation that the country needs to enter a new agreement with the IMF for the support of the economy. There is no hope that Pakistan could say goodbye to the lending agency. Despite tough conditions, Pakistan is still facing very high inflation which clocked in at 29.7 per cent for December from 29.2pc in the preceding month.

The latest data reveals that Pakistan has engaged in 24 arrangements with the IMF since becoming a member on July 11, 1950. This underscores the country’s historical reliance on IMF support to address economic challenges.

Source : Dawn News
 
IMF board approves Pakistan’s first review, allows immediate disbursement of $700m

The International Monetary Fund (IMF) on Thursday completed its first review of Pakistan’s economic reform programme supported by a $3 billion Stand-By Arrangement (SBA) and allowed the immediate disbursement of $700 million, according to the finance ministry.

A statement from the ministry said the completion of the first review by the IMF’s Executive Board and the payment of 528m in special drawing rights brought the total disbursements under the SBA to $1.9bn.

“IMF funding along with recent inflows from multilateral lenders will further help the Pakistani rupee, that is fairly stable [over the] last few months,” said Mohammad Sohail, CEO of Topline Securities.

He added that this new tranche would help Pakistan in getting rollovers from allied countries such as the United Arab Emirates, China and Saudi Arabia and ease external debt repayment pressure.

In June 2023, the IMF Executive Board had approved the much-needed nine-month arrangement with Pakistan “to support its economic stabilisation programme”. The approval had allowed for an immediate disbursement of $1.2bn, with the rest to be phased over the programme’s duration — subject to two quarterly reviews.

The current IMF programme is expected to conclude in the second week of April. The initial tranche of $1.2bn was released in July.

In November 2023, a Staff-Level Agreement was reached between the IMF staff and Pakistani authorities regarding the first review under Pakistan’s SBA. This agreement was contingent upon approval by the IMF’s Executive Board.

Pakistan is now more likely to receive the remaining amount in March under the $3bn SBA.

However, caretaker Finance Minister Shamshad Akhtar had already informed the nation that the country needs to enter a new agreement with the IMF for the support of the economy. There is no hope that Pakistan could say goodbye to the lending agency. Despite tough conditions, Pakistan is still facing very high inflation which clocked in at 29.7 per cent for December from 29.2pc in the preceding month.

The latest data reveals that Pakistan has engaged in 24 arrangements with the IMF since becoming a member on July 11, 1950. This underscores the country’s historical reliance on IMF support to address economic challenges.

Source : Dawn News
Congrats to whole of Pakistan!
 
The handing over of around $700 million brings the total disbursements under the SBA with the IMF to $1.9 billion.

On Thursday, the IMF’s executive board had approved the first review of the bailout package for Pakistan. The board meeting was held nearly two months after Pakistan and the IMF reached a staff-level agreement.

Pakistan and the IMF had signed the nine-month programme in July 2023 for a $3 billion lending as a bridge financing ahead of an expected long-term deal.

In recent weeks, the IMF, World Bank, Asian Development Bank (ADB), and Asian Infrastructure Investment Bank (AIIB) have helped Pakistan sustain its foreign reserves at their current levels.

The IMF has further cut Pakistan’s economic growth projection to 2% from July’s estimate of 2.5%.

Similarly, the IMF has cut the inflation rate forecast from 26% to nearly 24%, providing space for lowering the interest rates.

The IMF emphasised on continued fiscal consolidation to reduce public debt, while protecting development needs.

Pakistan remains “determined to achieve a primary surplus of at least 0.4% of GDP in FY24, underpinned by federal and provincial government spending restraint and improved revenue performance support, if necessary, by contingent measures,” a statement by the IMF read.

The country would also be required to “complete the return to a market-determined exchange rate”, it added.

“Pakistan would also pursue state-owned enterprise and governance reforms to attract investment and support job creation, while continuing to strengthen social assistance,” the statement continued.

The IMF has revised Pakistan’s foreign loan requirements to $25 billion for this fiscal year.

The Washington-based lender also lowered its inflation projection to 24% for this fiscal year -- cutting it from 25.9%.

The IMF remained successful in acquiring a date for the next general elections in Pakistan and in return ignored a few critical areas that in the past had become a cause for the failure of the last $6.5 billion bailout package.

It also brought the activities of the Special Investment Facilitation Council (SIFC) under its purview.

As against the old forecast of $32.9 billion, the IMF has now projected the foreign remittances at $29.4 billion -- a reduction of $3.5 billion, said finance ministry sources.

According to the IMF projections, the current expenditures in this fiscal year may remain around Rs14.6 trillion -- higher by Rs1.24 trillion.

However, the development spending is projected at Rs782 billion -- Rs168 billion less than the allocation approved by the National Assembly in June.

As a result, the size of the budget, for the first time, would cross Rs15.4 trillion in the history of the country.

The global lender has kept the overall primary balance figure unchanged at 0.4% of the GDP or Rs401 billion -- which would require massive revenue efforts and a squeeze on subsidies.

Pakistan has committed to the IMF to further increase the revenue.

Source : The Express Tribune
 
The International Monetary Fund (IMF) faces tough choices on how to deal with Pakistan after the February 8 general election and how to assess the country’s debt situation, former central bank governor Reza Baqir said.

The government secured a $3 billion loan programme with IMF in July that helped pull the cash-strapped nation back from the brink of a sovereign debt default.

However, the programme was a nine-month standby arrangement, set to expire this spring.

“The IMF will have to decide whether to pull the plug on Pakistan or not, and by that I mean it will have to decide about its assessment of debt sustainability,” said Baqir, head of sovereign advisory services at Alvarez & Marsal.

Baqir served as governor of the State Bank of Pakistan (SBP) from 2019 till 2022.

The IMF labelled Pakistan’s debt as sustainable, but also emphasised the significant and pronounced risks, said Baqir, who negotiated the country’s 2019 IMF programme and also worked at the Washington-based lender for almost two decades.

“That’s almost like having it both ways,” he said, adding investors would be watching whether the Fund would continue to label the debt as sustainable or whether it would offer its support on a debt restructuring as part of a new programme should authorities choose to go down that route.

Pakistan’s public external debt stood at just under $100 billion by the end of September last year, according to central bank data, with China and its lenders being the single largest creditor to the country.

Pakistan’s shorter-dated bonds are trading at 96 cents, fairly close to par, though longer-dated ones maturing after 2030 stand at just over 60 cents, well below the 70-cent threshold below which debt is seen as distressed.

Today, the bonds suffered sharp falls after Pakistan struck terrorist hideouts inside Iran amid rising tensions with its neighbour.

Pakistan would also be a potential candidate for a “debt-for-nature” style debt swap said Baqir, pointing to deadly 2022 floods that affected more than 33 million people.

Debt-for-nature swaps — where countries introduce eco-policies in return for having their debt cut — are growing in popularity after successful recent deals in places such as Belize and Ecuador’s Galapagos Islands.

Eugenio Alarcon, who recently joined Alvarez & Marsal responsible for Latin America & the Caribbean, said “countries have seen the benefits of these type of transactions because they can take a huge reduction in the stock of debt”.

On Tuesday, the IMF released the much awaited $700 million tranche, shoring up the SBP’s foreign reserves, which had dipped by $66m during the week ending January 5.

Source: Dawn

 

IMF hails increase in Pakistan energy tariffs, says economy is on the right track​

WASHINGTON (Dunya News/Web Desk) – As people in Pakistan are already crushed by rising energy prices, the International Monetary Fund says recent increases in electricity and gas tariffs were important to shore up energy sector viability, but broader reforms are still needed to tackle the structurally.

The IMF in a report on the first review of the stand-by arrangement says the caretaker government took significant action in the power and gas sectors to stem the rise in circular debt, which, combined, reached approximately 5.25 per cent of GDP by the end of last fiscal year 2022-23.

Moreover, energy subsidies are also limited to Rs976 billion in the 2023-24 budget, the report mentions – the reason why the power and gas tariffs have jumped to the record-high levels, triggering a cost of living crisis and unparalleled cost of doing business.

Timely implementation of scheduled tariff adjustments and broader reform efforts are critical to restoring energy sector viability, the IMF notes.

As far as the gross domestic product (GDP) is concerned, the IMF has predicted a 2pc growth rate for the current financial year ending on June 30 and cited an improvement in foreign reserves from $4.2 billion to $8.2bn.

It says Pakistan achieved all the targets set for the first quarter July-September, the IMF said, but added that the industrial sector was facing difficulties with a growth rate of just 2.5pc – an obvious consequence of increasing the energy tariffs and interest rates, propelling the cost of doing of business to the highest level in the country’s history.

However, the agriculture sector witnessed a 5.1pc, the IMF said, adding that Pakistan’s economy was moving in the right direction.

About the rising prices, the world’s stop lender said inflation in Pakistan was recorded at 36pc in May which slid to 26.8pc in October. However, the report didn’t mention that the alarming increase since then as food inflation is pushing the over figures up, with the Sensitive Price Indicator (SPI) climbing to 44.64pc on year-on-year basis for the week ending January 18.

The IMF also welcomed the improved revenue collection which, it said, helped arresting the widening deficit and said Pakistan has also taken the required steps to stop cross-border smuggling of US dollar.

Pakistan’s budget deficit would be around 7.6pc of GDP, the IMF forecast says, with the current account deficit hovering around 1.6pc of the GDP.

Earlier, the latest official data showed that the country had witnessed a massive reduction in current account deficit during the first six months of 2023-24.

Source: Dunya News
 
This is getting an increased problem for the people of Pakistan to pay off their utility bills. The government should look for other ways to payoff IMF loans than to increase the electricity or gas prices that is happening in almost every month.
 
The International Monetary Fund (IMF) commended the Federal Board of Revenue’s (FBR) performance for expanding Pakistan’s tax net, ARY News reported.

The international lender hopes Pakistan will collect the highest-ever tax in FY2023-24 as the FBR is on the path to collect Rs9.4 trillion tax.

Furthermore, the IMF has forecast tax collection of Rs11.5 trillion in the next fiscal year 2024-25. The lender is hopeful that Pakistan will collect Rs4803 billion in direct taxes and Rs4114 billion on account of sales tax.

On Thursday, the International Monetary Fund (IMF) praised the policies of Pakistan’s caretaker government for economic stability.

According to details, the IMF, appreciating the economic stability efforts of the interim government, stated that Kakar government had been successful in maintaining economic stability.

The IMF mentioned that the caretaker government had made decisive policies for economic stability, and until the general elections in Pakistan on February 8, the interim setup will remain in power.

Source: ARY

 
The International Monetary Fund (IMF) has urged Pakistan to introduce other social support mechanisms along with the Benazir Income Support Program (BISP), ARY News reported on Sunday.

The IMF in a statement said that Pakistan should take more steps for extending social protection to the weaker classes. “Pakistan should take consistent efforts to run the social assistance programme,” IMF stated.

“The protected electricity and gas tariff slabs should remain continue,” the monetary fund advised.

“In current fiscal year the targets of health and education expenditures were achieved in September, but the caretaker government could not attain the December target owing to limited capability,” IMF stated.

The lender has urged the next elected government to continue social security expenditures till the end of the ongoing financial year.

The IMF lauded the BISP for its best mechanism to extend prompt support adding that the program still has capacity for further improvement.

Source: ARY

 
Explainer: How bad is Pakistan's debt crisis and can the IMF save it?

Negotiations on a new government in Pakistan have allayed immediate fears of instability in the nuclear-armed nation following inconclusive elections last week, but the risk of a full-scale economic crisis remains.

A $3 billion programme from the International Monetary Fund (IMF) runs out next month and securing a new and much bigger one is widely seen as the priority for the new administration.

WHO COULD THE IMF NEGOTIATE WITH?

The largest party, the Pakistan Muslim League-Nawaz (PML-N), secured support on Tuesday from the second biggest, the Pakistan People's Party (PPP), and is trying to persuade it to form a majority coalition.

The caretaker government in place since August is implementing the IMF loan programme which helped to avert a sovereign debt default when it was approved in July. Recent legislation allows it to make decisions on economic matters in the South Asian country as well as overseeing the election. It did not immediately respond to a request for comment on the prospects for a new IMF deal.

HOW BAD IS THE ECONOMIC SITUATION?

Pakistan's foreign exchange reserves stand at roughly $8 billion which barely covers two months of essential imports although it is an improvement from the $3.1 billion they were down to just over a year ago.

A $1 billion bond payment in two months' time will cut them further although the country is getting a $700 mln injection of already-approved IMF money too.

"It is imperative (to get into another IMF programme), given that Pakistan’s foreign exchange reserves are abysmally low compared to its large impending external debt repayment needs. Former deputy central bank governor Murtaza Syed said. "There is no alternative".

HOW MUCH DEBT IS THERE?

Pakistan's debt-to-GDP ratio is already above 70% and the IMF and credit ratings agencies estimate that the interest payments on its debt will soak up 50% and 60% of the government's revenues this year. That is the worst ratio of any sizable economy in the world.

Analyst firm Tellimer says the country's problem is primarily domestic debt, which comprises around 60% of its debt stock and 85% of its interest burden. Pakistan's external debt stock - denominated largely in dollars - is also heavily skewed towards bilateral and multilateral creditors, which comprise roughly 85% of the total.

Bonded debt comprises just 8% of the external debt stock and 3.4% of its total public debt. That is dwarfed by the near 13% of total debt that it owes to China which has lent to Pakistan money over the years for infrastructure projects and for other types of spending.

HOW IS IT AFFECTING THE POPULATION?

A combination of tax and gas tariff hikes and a steep fall in the rupee currency have pushed inflation up to nearly 30% year-on-year. It is expected to come down later in the year but will stay well above the central bank's 5-7% target for some time, economists forecast.

The rupee is expected to fall further too. For context, the implied exchange rate underlying the latest IMF staff report is 305 rupee to the dollar for this fiscal year and 331 per dollar in FY 24/25, levels which are roughly 8% and 15% weaker than the current exchange rate .

Source: Reuters

 
Pakistan's money situation is tough. They've got only $8 billion for two months of important stuff. Soon, they owe $1 billion more. Their debt compared to what they make (GDP) is over 70%, and interest payments take up a big chunk of the money the government gets. The new leaders have to deal with this, get a new deal with the IMF, and figure out how to manage all the money they owe. People are feeling it too,prices are going up a lot, and the local currency isn't doing well.
 
As it stands, Pakistan's current debt situation is sustainable. 70% Debt to GDP is not a problem but the issue is threefold
- Percentage of GDP collected as Government revenue through taxes is too low which affects capacity to service debt
- Interest rates on the debt are too high which creates massive interest obligations especially as a proportion of Government revenue
- Most of the debt profiles relatively short-term which creates uncertainty on rollovers and cashflows in any given year

Rather than a chaotic default at some point, it makes sense for Pakistan to enter to planned restructuring discussions. Luckily the debt profile helps. If you can persuade China to take the lead in dropping interest rates and extending tenure, the Paris Club and IMF will fall in line. No need to even to bother about bondholders who are usually the most troublesome since they are such a small proportion. Domestic debt is never a problem. It can be inflated away.

Pakistan needs to show some political stability and commitment to reform to bring the big boys to the table though. At least a year or two. Plus it needs to play the diplomatic game carefully. Stay in the China camp since they own a huge chunk of the debt and need to be persuaded to take the lead but don't go so far as to anger the US and allies. After all, they still pretty much control the IMF.

It's a difficult challenge for a government that doesn't even have a clear mandate.
 
As it stands, Pakistan's current debt situation is sustainable. 70% Debt to GDP is not a problem
It's not as simple as that, a very important fact is that most of this debt is in USD. Owning debt in a foreign currency especially the USD is very very risky because of vulnerabilities to exchange rate fluctuations, the Fed etc...

In 5 years the USD has gone from 140 rupees to 280-300!
 
It's not as simple as that, a very important fact is that most of this debt is in USD. Owning debt in a foreign currency especially the USD is very very risky because of vulnerabilities to exchange rate fluctuations, the Fed etc...

In 5 years the USD has gone from 140 rupees to 280-300!
While your broader point about owning debt in a foreign currency especially when you run a huge current deficit is correct, you're incorrect to state that "most of this debt is in USD." Two-thirds of Pakistan's debt is domestic which as I said...can be inflated away. Only a third is denominated in foreign currency. Not bad for most countries but terrible for a country like Pakistan whose primary source of foreign exchange is fresh debt and remittances...not as would be healthy, exports.
 

Election outcome, political uncertainty may complicate Pakistan’s new IMF deal: Fitch​

Global ratings agency Fitch on Monday warned that the “close outcome” of the February 8 polls and the resulting “near-term political uncertainty” may complicate Pakistan’s efforts to secure a financing agreement with the International Monetary Fund (IMF).

Nearly 60.6 million Pakistanis voted in the country’s 12th general elections earlier this month amid a day-long suspension of cellular services and rigging allegations.

However, the outcome of the polls resulted in a split mandate as PTI-backed independent candidates emerged at the top in the National Assembly elections.

Subsequently, the PPP and PML-N began efforts to hammer out some sort of power-sharing formula in the national and Punjab assemblies. On the other hand, the PTI has announced an alliance with the Sunni Ittehad Council in the Centre, Khyber Pakhtunkhwa and Punjab.

In a report released today, US-based Fitch Ratings — one of three leading global rating agencies — said a new IMF deal, to succeed the Stand-By Arrangement (SBA) expiring in March 2024, was key to Pakistan’s credit profile.

“[…] We assume one will be reached within a few months, but an extended negotiation or failure to secure it would increase external liquidity stress and raise the probability of default,” it said.

The rating agency highlighted that while Pakistan’s external position had improved in recent months — with the State Bank of Pakistan reporting net foreign reserves of $8.0 billion as of Feb 9 — “this is low relative to projected external funding needs” that are expected to exceed reserves for the next few years.

“We estimate Pakistan met less than half of its USD18 billion funding plan in the first two quarters of the fiscal year ending June 2024 (FY24), excluding routine rollovers of bilateral debt,” it said.

Fitch further noted that the sovereign’s vulnerable external position meant that securing financing from multilateral and bilateral partners would “be one of the most urgent issues on the agenda for the next government”.

“This looks set to be a coalition of the PML-N and PPP, despite the strong performance by candidates associated with Imran Khan’s PTI in the election. Negotiating a successor deal to the SBA and adhering to the policy commitments under it will be critical to most other external financing flows, not just from the IMF, and will strongly influence the country’s economic trajectory in the longer term,” it stated.

Fitch said that finalising a new IMF deal was likely to be challenging.

“The current SBA is an interim package and we believe any successor arrangement would come with tougher conditions, which may be resisted by entrenched vested interests in Pakistan. Nonetheless, we assume any resistance will be overcome, given the acute nature of the country’s economic challenges and the limited alternatives,” it added.

The rating agency further warned that continued political instability could prolong any discussion with the IMF, delay assistance from other multilateral and bilateral partners or hamper the implementation of reforms.

“We believe a government will assume office and engage with the IMF relatively quickly, but risks to political stability are likely to remain high,” it said, warning that public discontent could rise if the PTI remained sidelined.

Moreover, Fitch said Pakistan’s government had a “poor record” of completing IMF programmes and highlighted that less than half of the South Asian country’s 24 IMF programmes had disbursed over 75 per cent of the funding available.

“However, there has been fair progress on targets under the current SBA. Moreover, we perceive there is a stronger consensus within Pakistan on the need for reform, which could facilitate the implementation of a successor arrangement.”

The rating agency said that policy risks could rise over time if the external liquidity pressure eased.

“This could lead to the renewed build-up of economic and external imbalances. We believe Pakistan’s external finances will remain structurally weak until and unless it develops a private sector that can generate greater significantly more export income, attract FDI (foreign direct investment) or reduce import dependence,” it added.

Source: DAWN
 
It seems tougher days are coming for the people of Pakistan with the increased prices of electicity, gas, petrol etc.
 
Pakistan plans to seek a new loan of at least $6 billion from the International Monetary Fund to help the incoming government repay billions in debt due this year, Bloomberg News reported on Thursday, citing a Pakistani official.

The country will seek to negotiate an Extended Fund Facility with the IMF, the report said, adding that the talks with the global lender were expected to start in March or April.

Pakistan averted default last summer thanks to a short term International Monetary Fund bailout, but the programme expires next month and a new government will have to negotiate a long-term arrangement to keep the $350-billion economy stable.

Ahead of the bailout, the South Asian nation had to undertake a slew of measures demanded by the IMF, including revising its budget, a hike in its benchmark interest rate, and increases in electricity and natural gas prices.

The IMF did not immediately respond to a Reuters' request for comment on the Bloomberg report. Pakistan's finance ministry could not be immediately reached for comment.

Days ago, the international credit rating agency Fitch had warned that the close outcome of the Feb 8 general elections and resulting near-term political uncertainty may complicate efforts to secure a financing agreement with the International Monetary Fund.

“This looks set to be a coalition of the Pakistan Muslim League-Nawaz and the Pakistan Peoples Party, despite the strong performance by candidates associated with Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) in the elections,” the credit rating agency had said in its report on Pakistan’s economy released on Monday.

The report stated that a new IMF deal, to succeed the Stand-By Arrangement (SBA) expiring in March 2024, was key to the country’s credit profile.

"We assume one will be achieved within a few months, but an extended negotiation or failure to secure it would increase external liquidity stress and raise the probability of default.”

It noted that while Pakistan’s external position had improved in recent months, with the State Bank of Pakistan reporting net foreign reserves of $8 billion as of Feb 9, 2024, up from a low of $2.9 billion on Feb 3, 2023, “nevertheless, this is low relative to projected external funding needs, which we expect will continue to exceed reserves for at least the next few years”.

"We estimate Pakistan met less than half of its $18 billion funding plan in the first two quarters of the fiscal year ending June 2024 (FY24), excluding routine rollovers of bilateral debt.”

It added that the “sovereign’s vulnerable external position means that securing financing from multilateral and bilateral partners will be one of the most urgent issues on the agenda for the next government”.

“Negotiating a successor deal to the SBA and adhering to the policy commitments under it will be critical to most other external financing flows, not just from the IMF, and will strongly influence the country’s economic trajectory in the longer term.”

Fitch highlighted that finalising a new IMF deal was likely to be challenging. “The current SBA is an interim package and we believe any successor arrangement would come with tougher conditions, which may be resisted by entrenched vested interests in Pakistan.”

Nonetheless, it added, “we assume any resistance will be overcome, given the acute nature of the country’s economic challenges and the limited alternatives”.

It warned that if the political instability continued, discussions with the IMF would be prolonged, assistance from other multilateral and bilateral partners delayed, or implementation of reforms hampered.

“We believe a government will assume office and engage with the IMF relatively quickly, but risks to political stability are likely to remain high.”

The report also warned that public discontent could rise further if the PTI remained sidelined as the election revealed continued strong public support for the party.

It highlighted the government’s “poor record” of completing the IMF programmes, saying that less than half of its 24 IMF programmes had disbursed more than 75% of the funding available.

“However, there has been fair progress on targets under the current SBA. Moreover, we perceive there is stronger consensus within Pakistan on the need for reform, which could facilitate the implementation of a successor arrangement.”

It further warned that policy risks could rise again over time if external liquidity pressures eased, either as a result of initial reform successes or developments outside Pakistan, such as a substantial drop in oil prices.

“This could lead to the renewed build-up of economic and external imbalances. We believe Pakistan’s external finances will remain structurally weak until and unless it develops a private sector that can generate greater significantly more export income, attract FDI or reduce import dependence.”

Express Tribune

 
Pakistan wants to borrow another $6 billion from the IMF. It means more taxes on the people of Pakistan.
 

Pakistan looking to hike IMF loan to up to $8bn​


ISLAMABAD: Pakistani authorities are exploring options for the augmentation of the upcoming IMF bailout package from $7.5 to $8 billion and one of the possibilities can be applying Climate Finance along with Extended Fund Facility (EFF).

If this arrangement is finalised, Pakistan could maximise the size of the programme from $6 billion under EFF to $7.5 or $8 billion keeping in view the specific quota available to Pakistan under Special Drawing Rights (SDRs).

Top official sources confirmed to The News on Sunday that Pakistan had discussed the possibility of augmentation of the size of the programme on the occasion of finalising the last Standby Arrangement (SBA) programme in June 2023 but the IMF did not entertain the request on the last occasion. It was argued by the IMF that it was a short-term programme so this possibility could be explored next time.

On pattern of Bangladesh, Pakistani authorities are now exploring the possibilities for seeking increased size of the upcoming programme, and climate finance would be explored to augment the Extended Fund Facility (EFF) programme.

There is one IMF instrument under the Resilience and Sustainability Facility (RSF) which provides affordable long-term financing to countries undertaking reforms to reduce risks to prospective balance of payments stability, including those related to climate change and pandemic preparedness.

This facility provides long-term financing to strengthen economic resilience and sustainability by (i) supporting policy reforms that reduce macro-critical risks associated with climate change and pandemic preparedness, and (ii) augmenting policy space and financial buffers to mitigate the risks arising from such longer-term structural challenges.

The eligible countries requesting access to the RSF need:

High-quality policy reforms addressing the long-term structural challenges of climate change or pandemic preparedness.

A concurrent IMF-supported programme with upper credit tranche quality policies (UCT programme)

It can be financing or non-financing and must be under one of the following arrangements: SBA, EFF, PLL, FCL, SCF, ECF, PCI or PSI. Emergency financing facilities (RFI, RCF), SMP, or SLL do not qualify. There should be at least 18 months remaining in the accompanying UCT programme.

Sustainable debt and adequate capacity to repay

Linked to reform progress, each measure is connected to one RSF disbursement. A reform measure can be a single policy action or a set of very closely related actions constituting a single reform. Where a measure includes multiple actions, all must be implemented to unlock the associated disbursement. See more on conditionality.

The reviews will take place concurrently with reviews under the UCT programme, once the expected date of completion of a reform measure and the associated disbursement availability date has passed.

Expected to coincide with the remaining duration of the accompanying UCT programme, minimum duration is 18 months. Expires when all amounts available are disbursed. Automatically ends upon the termination, cancellation, or expiry of the concurrent UCT programme. There will be a 20-year maturity and a 10½ -year grace period during which no principal is repaid.

Borrowers pay an affordable interest rate with a modest margin over the three-month SDR rate. A tiered interest structure differentiates financing terms across country groups, with low-income members benefiting from more concessional terms.

Pakistan has recently approved the Public Investment Management Assessment (PIMA) framework including Climate- PIMA under the guidelines of the IMF’s technical report. Pakistan is committed to the IMF to improve its public investment management (PIM) to support economic growth and service delivery and make public infrastructure more sustainable and resilient to climate change. This assessment applies the IMF’s Public Investment Management Assessment (PIMA) framework, including the Climate-PIMA module. It highlights some of the important efforts made in recent years to strengthen PIM and identifies the scope for further strengthening of key institutions. In a context where fiscal space is tight and climate action urgent, it recommends several targeted actions to move reforms forward.

 
$8 billion is a huge amount which may give some short time relief for the government but for the common people, it will only result in inflation.
 

IMF review mission to arrive Pakistan tonight​


ISLAMABAD (News Desk) – The IMF team is all set to hold negotiation with economic team of Ministry of Finance to review the progress on the ongoing programme.

A meeting under the chairmanship of Finance Minister Muhammad Aurangzeb will be held with the IMF team for negotiation on the overall performance of the IMF programme.

Sources said the negotiation with the Fund would be held from March 14 to 18.

In the results of the successful negotiations, instalments worth $1.10 billion will be released to Pakistan.

Discussions about the upcoming programmes are also expected with the IMF review mission during their stay in the country.

Source: Dunya News
 
I hope this will not result in increased tariffs for Electricity and gas. The summer is coming and paying electricity bill has been a big headache for a common man of Pakistan.
 

Progress expected on IMF $1.1bn tranche​

Ministry of Finance insiders reveal optimism for a staff-level agreement

In the last leg of discussions between Pakistan and the International Monetary Fund (IMF), officials anticipate headway today regarding the disbursement of the final $1.1 billion tranche from the $3 billion standby arrangement.

Ministry of Finance insiders reveal optimism for a staff-level agreement.

Key issues under deliberation during the four-day negotiation period are set to be finalised, paving the way for a draft of the memorandum of economic and financial policies.

During the third day of discussions, the government had committed to bringing the real estate sector into the tax net.

Source: Dawn News
 
Does anyone have any idea on how these loans will be repaid with interest? How does a country or even an individual take loan after loan without any blueprint or plan how those loans will be repaid? It's like opting for self destruction. All I've heard in the last 10 years is Pakistan taking loan after loan from the IMF.
 

IMF set to approve 1.1bn dollars as Pakistan addresses concerns​

ISLAMABAD (Dunya News) – The economic review discussion between Pakistan and the IMF has successfully concluded.

According to Ministry of Finance, Pakistan has satisfied the IMF team about the economic performance of the country and thus the fund is all set to approve $1.1 billion tranche.

The sources said after the successful completion of the talks the fund would announce the final statement tonight.

Meanwhile, Finance Minister Muhammad Aurangzeb also had a meeting with American Ambassador Donald Bloom.

Both the leaders have discussed cooperation between Pakistan and the US in various sectors including trade, investment and metrological sectors.

The envoy assured the smooth completion of the IMF Programme and reiterated his commitment to expand economic cooperation.

Source: Dunya News
 

Energy subsidy cuts likely to be Rs375bn in 2024-25, as Islamabad aims at new IMF deal​

ISLAMABAD (Dunya News/Web Desk) – With the International Monetary Fund (IMF) sticking to the tough conditions it has been imposing on Pakistan like other developing countries, sources in finance ministry say the energy sector may witness a massive Rs375 billion subsidy cut in the next fiscal year.

It means the electricity and gas tariffs will further be hiked for domestic consumers who are already crushed by a record high and persistent inflation.

At the same time, the unending series of increasing the energy prices have propelled the cost of doing business to a level where the many industrial units are finding it hard to sustain.

The state of affairs are further worsened by the interest rates hikes which has pushed the borrowing costs to 22 per cent.

Although the interest rates haven’t been hiked since June last year, but the State Bank of Pakistan’s policy to avoid rate cuts complicated the things for businessmen who are clamouring for reducing the borrowing costs.

The combination of higher energy tariffs and interest rates is responsible for the current economic as there is no expansion in the existing businesses nor any incentive for establishing new ones.

On the other hand, the planned subsidy cuts will obviously further fuel and sustain inflation, thus resulting in more delay in the vociferously demanded and much-awaited interest rate cuts.

However, Islamabad is desperate for another IMF deal, meaning that the government will have to accept the strict conditions set by the Washington-based lender. It includes privatisation of the lossmaking state-owned entities (SOEs), as the Islamabad is swiftly moving ahead for disposing of the national flag carrier – PIA – in first of the major transactions.

As far as the details of the proposed subsidy allocations for 2024-25 are concerned, the sources say the total amount is estimated to be around Rs600 billion.

Further breakdown shows that the independent power plants (IPPs) will be among the beneficiaries while the power distribution companies (Discos) and K-Electric are also going to receive money under tariff differential and other heads.

Moreover, the consumers in Azad Kashmir and the erstwhile trial region [Federally Administered Tribal Areas (FATA)] will also continue getting electricity supply at subsidised rates along the tube-wells in Balochistan, which are used for agricultural purposes.

On the other hand, a chunk of the subsidy may also be reserved for K-Electric under the industrial support package.

Source: DUNYA
 
It looks like paying electricity bills would be even more difficult in this summer. People expect better plans from the government rather than just keep on raising the prices of electricity and fuel.
 
Finance Minister Aurangzeb leads delegation to US for IMF talks on new bailout package

Finance Minister Muhammad Aurangzeb flew to the United States along with a delegation on Sunday to initiate talks with the International Monetary Fund for a new loan programme.

According to sources, negotiations between Pakistan and the IMF for a new bailout package will begin next week, with the country formally making a request to the global lender in this regard.

There is also a possibility of a meeting between Finance Minister Aurangzeb and IMF Managing Director Kristalina Georgieva.

Sources have indicated that members of the economic team would also participate in the annual meetings of the IMF and World Bank.

Earlier on Thursday, IMF chief Kristalina Georgieva stated that Pakistan was in discussions with the IMF on a potential follow-up programme to its nine-month $3 billion stand-by arrangement.

During an event at the Atlantic Council think-tank, Georgieva said that Pakistan was successfully completing its existing programme and its economy was performing somewhat better, with reserves now being built up.

However, she expressed the need for Pakistan to address important issues.

"There is a commitment to continue on this path, and the country is turning to the fund for potentially having a follow-up program," Georgieva said, flagging issues that Pakistan still needed to address.

"There are very important issues to be solved in Pakistan: the tax base, how the richer part of society contributes to the economy, the way public spending is directed, and of course, creating ... a more transparent environment."

Pakistan and the IMF last month reached a staff-level agreement on the second and last review of the $3 billion stand-by arrangement, which, if cleared by the global lender's board, will release about $1.1 billion to Pakistan.

Before his departure to Washington, Finance Minister Aurangzeb met with Prime Minister Shehbaz Sharif on Friday and briefed him about his upcoming visit to the United States.

The minister discussed his scheduled meetings with officials from the IMF, World Bank and other financial institutions with the premier.


Dunya News
 

Pakistan, IMF discussing new multi-billion-dollar programme: Aurangzeb​


Washington (AFP/APP) – Pakistan has initiated discussions with the IMF over a new multi-billion dollar loan agreement to support its economic reform programme, Finance Minister Muhammad Aurangzeb told AFP.

Pakistan is nearing the end of a nine-month, $3 billion loan programme with the International Monetary Fund designed to tackle a balance-of-payments crisis which brought the country to the brink of default last summer.

With the final $1.1 billion tranche of that deal likely to be approved later this month, Pakistan has begun negotiations for a new multi-year IMF loan programme worth 'billions' of dollars, Aurangzeb said during an interview in Washington.

"The market confidence, the market sentiment is in much, much better shape this fiscal year," said Aurangzeb, a former banker.

"It's really for that purpose that, during the course of this week, we have initiated the discussion with the Fund to get into a larger and an extended programme," he added.

An IMF spokesperson told AFP that the Fund is "currently focused on the completion of the current Stand-by Agreement programme," referring to the ongoing nine-month programme scheduled for completion shortly.

"The new government has expressed interest in a new programme, and Fund staff stands ready to engage in initial discussions on a successor programme," the spokesperson added.

'Three-year programme'

During his visit to Washington, Aurangzeb will also attend the spring meetings organized by the IMF and World Bank, which kick off in earnest Tuesday, with two clear objectives: to help countries combat climate change, and to assist the world's most indebted nations.

The meetings -- which bring central bankers together with finance and development ministers, academics, and representatives from the private sector and civil society to discuss the state of the global economy -- will kick off with the IMF's publication of its updated World Economic Outlook.

Pakistan held elections in February this year which were marred by allegations of rigging, with opposition jailed and barred from running, and his Pakistan Tehreek-e-Insaf (PTI) party subject to a crackdown.

The shaky coalition that emerged, led by Shehbaz Sharif, is now tasked with engineering an economic turnaround by implementing a raft of unpopular belt-tightening measures.

"I do think that we will at least be requesting for a three-year programme," Aurangzeb said. "Because that's what we need, as I see it, to help execute the structural reform agenda."

"By the time we get to the second or third week of May, I do think we'll start getting into the contours of that discussion," he added.
Balancing US-China rivalry

Pakistan has close economic ties to both the United States and China, which has put it in a tricky position as the two countries have embarked upon a costly trade war.

"From our perspective it has to be an and-and discussion," Aurangzeb said when asked how the Sharif government plans to conduct its trading relationships with the world's two largest economies.

"[The] US is our largest trading partner, and it has always supported us, always helped us in terms of the investments," he said.

"So that is always going to be a very, very critical relationship for Pakistan."

"On the other side, a lot of investment, especially in infrastructure, came through CPEC," he said, referring to the roughly 1,860-mile long China-Pakistan Economic Corridor designed to give China access to the Arabian Sea.

Aurangzeb said there was a "very good opportunity" for Pakistan to play a similar role in the trade war as countries like Vietnam, which has been able to dramatically boost its exports to the US following the imposition of tariffs on some Chinese goods.

"We have already a few examples of that already working," he said. "But what we need to do is to really scale it up."

Reform programme

As part of the structural reform programme agreed to by the previous government, Pakistan is in the middle of a privatization drive to sell off its poorly-performing state-owned enterprises (SOEs).

The first SOE on the list is Pakistan International Airlines, the country's flag carrier. "We will get to know in the next month or so with respect to interest from prospective bidders," Aurangzeb said.

"Our desire is to go through with that privatization and take it through the finishing line by the end of June," he added. If the PIA privatization goes well for the government, other companies could soon follow.

"We're creating an entire pipeline," he said, adding: "Over the next couple of years we want to really accelerate that."

AURANGZEB SEEKS FOREIGN INVESTMENTS IN IT, AGRICULTURE, MINING, ENERGY SECTORS

Federal Minister for Finance and Revenue, Muhammad Aurangzeb urged the influential Pakistani American businessmen and tech entrepreneurs to capitalize on the growing opportunities in Pakistan in key sectors of agriculture, Information Technology (IT), mining and energy.

The minister during a meeting with businessmen and tech entrepreneurs, on the sidelines of the IMF/World Bank Spring meetings in Washington D.C, lauded the important role of Pakistani diaspora in the socio-economic development of Pakistan.

 
Our governments will keep on taking these packages and keep on increasing the gas, electricity, petrol prices. I wonder is this pattern ever going to change?
 
WASHINGTON: The International Monetary Fund (IMF) has not yet included Pakistan on the agenda of its executive board meeting scheduled for April 29, ARY News reported.

According to the details, the IMF issued the agenda of the executive board meeting set to be held on April 29 but a review under the $ 3 billion stand-by arrangement (SBA) programme with Pakistan is not on the agenda.

Pakistan is hoping the approval from the executive board which would pave the way for the country to receive funds of around $1.1 billion as its final tranche of the $3-billion SBA signed last year in June 2023.

Earlier, the IMF hinted at holding the executive meeting later in April.

Earlier Finance Minister Muhammad Aurangzeb told Reuters that Pakistan hopes to agree the contours of a new International Monetary Fund (IMF) loan in May.

According to the finance minister, the government has kicked off talks with ratings agencies to lay the groundwork for a return to international debt markets.

The country’s current $3 billion arrangement with the fund runs out in late April and the government is seeking a longer and bigger loan to help bring permanence to macroeconomic stability as well as an umbrella under which the country can execute much needed structural reforms, the minister said.

Source: Ary News
 

Pakistan makes formal request for new $6 to $8bn IMF loan program​

In its mission to seek a new bailout package from the International Monetary Fund (IMF), Pakistan has made a formal request for a new loan program ranging between $6 to $8 billion.

The formal request was made by Finance Minister Muhammad Aurangzeb during a meeting with IMF officials held in Washington.

The proposed bailout package aims to address various economic needs, including funding for the Extended Fund Facility (EFF) program and climate financing initiatives. The exact size of the potential loan program is expected to be determined during upcoming negotiations scheduled for next month.

An IMF team is anticipated to visit Pakistan in mid-May to engage in detailed discussions and assess the country's economic situation.

As part of the negotiation process, Pakistan will need to adhere to several strict conditions set forth by the IMF, including measures to increase the tax net. Discussions will also explore the possibility of further increasing the size of the three-year package.

The new financial year budget will also be formulated in consultation with the IMF, underscoring the importance of aligning fiscal policies with the objectives of the loan program, according to sources.

The finance minister has expressed optimism regarding the possibility of reaching a staff-level agreement with the IMF by late June or early July, highlighting the urgency and importance of securing financial assistance to address Pakistan's economic challenges.

During an interview with Reuters in Washington, the minister expressed Pakistan's intention to secure a substantial and extensive loan program from the IMF. He anticipates that the outline of this new program will be finalized in May, paving the way for additional financial assistance as part of the plan.

Highlighting Pakistan’s efforts to enhance its international rating in the next fiscal year, the minister revealed ongoing discussions with international rating agencies to facilitate the country’s return to the international debt market.

Source: SAMAA
 
It seems the first priority of every new government is to get an IMF deal. I wonder when this trend is going to end.
 
It seems the first priority of every new government is to get an IMF deal. I wonder when this trend is going to end.
Never. Pakistan is forever stuck with a begging bowl.

Of course iron brother could make the problem go away in a flash.
 
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