This month, an IMF mission is anticipated to arrive to finalize the next program
An IMF team is expected to arrive in Pakistan in mid-May to finalize the terms of Islamabad next bailout program under the $6–$8 billion Extended Fund Facility (EFF).
According to the report, the IMF delegation will be in the nation for around two weeks, during which time it will develop the macroeconomic and fiscal policies for the next three to four years.
It further stated that the administration may impose strict measures to achieve budgetary stabilization when it presents the upcoming budget 2024–25 to parliament on June 6 or 7.
This move occurs just a few days after Pakistan formally requested the Fund last month for the next bailout package, with the option of increasing it through climate funding.
Following their meeting with Kristalina Georgieva, the managing director of the IMF, last month, Finance Minister Muhammad Aurangzeb told Reuters, “We expect the IMF mission to be in Islamabad around the middle of May — and that is when some of these contours will start developing.”
But the precise scope and duration won’t be known until May 2024, when an agreement has been reached on the main features of the next program.
In April, Jihad Azour, the Director of the IMF for Middle East and Central Asia, also stated that the reform package is now more significant than the program’s size and that the Fund is prepared to assist Pakistan.
Speaking at a news conference on the fringes of the IMF 2024 Spring Meetings, Azour stated, “I think what is important at this stage is to accelerate the reforms, double down on the structure of reforms in order to provide Pakistan with its full potential of growth.”
Prime Minister Shehbaz Sharif and Georgieva met last week in Riyadh on the fringes of the World Economic Forum Special Meeting. During their meeting, the two talked about Pakistan joining another IMF program to make sure that the progress made the previous year was maintained and that its trajectory of economic growth remained positive.
The meeting came after the Washington-based lender disbursed SDR 828 million, or almost $1.1 billion, as part of the third and final tranche of the $3 billion SBA with Pakistan, which the nation obtained last summer to avoid a sovereign default.
It should be mentioned that the Federal Bureau of Revenue (FBR) is considering putting monthly pensions of Rs. 100,000 under the tax net. In addition, another suggestion suggests that the taxable limit amounts of retirees be subject to a fixed rate of 10%.
The primary surplus has stayed positive, but the total fiscal balance has been deteriorating as a result of net revenue collections falling short of debt service obligations, which turned out to be the biggest expense item.
Islamabad is anticipated to ask the IMF for augmentation through climate funding, as is being done by Bangladesh, to increase the amount of the loan program, with the Fund expected to suggest severe taxing measures and substantial spending cuts to accomplish fiscal consolidation.
Additionally, the program amount for Egypt was expanded to $8 billion.
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