IMF to release $500M, After deal with Pakistan on Reforms
The International Monetary Fund and Pakistan have reached the staff-level agreement on Tuesday over Structural reforms that will cause IMF to release $500M for the country, said the Pakistan Finance Ministry and IMF in a press release.
“The package strikes an appropriate balance between supporting the economy, ensuring debt sustainability, and advancing structural reform. Pending approval of the Executive Board, the reviews’ completion would release around US$500 million” the Fund said in a statement.
The country’s Finance Minister Dr, Abdul Hafeez Shaikh also authenticated the same through his Twitter handle sharing the Press release by IMF.
(1/2) I would like to share that the Government of Pakistan has reached a staff level agreement with the IMF. Overcoming the challenges created by the Pandemic has required concerted effort.
— Dr. Abdul Hafeez Shaikh (@a_hafeezshaikh) February 16, 2021
Further, he thanked the Prime minister of Pakistan Imran Khan, and IMF Staff for their cooperation and support for this meeting.
IMF affirmed in the statement that the COVID-19 shock temporarily disrupted Pakistan’s progress under the EFF-supported program.
“The Pakistani authorities remain committed to ambitious policy actions and structural reforms to strengthen economic resilience, advance sustainable growth, and achieve the EFF’s medium-term objectives,” the Fund said in the press release.
Praising the efforts of the State Bank of Pakistan the Fund Said, “The State Bank of Pakistan (SBP)’s monetary and exchange rate policies have served Pakistan well and were critical in helping to navigate the COVID-19 shock.”
“The strengthened international reserves’ position since the start of the program; with gross reserves almost doubling to USD 13 billion until January 2021 and net international reserves (NIR) increasing by over USD 9 billion until December 2020; and the shock absorption displayed by the market-based exchange rate, allowed the SBP’s to pre-emptively proceed to a large easing of monetary policy, and a sizeable expansion of refinancing facilities”, the Fund added further.
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IMF’s Positon On Pakistan’s Reforms So Far
Talking about the reforms of this Extended Fund Facility Program; IMF said that the authorities are moving steadfastly on a number of important reforms. These reforms include; strengthening regulatory agencies’ legal frameworks (NEPRA and OGRA Acts), consolidating SBP’s autonomy (SBP Act), and improving state-owned enterprises (SOE) management (SOE Law).
“In addition, they( authorities) have conducted a triage of SOE, and are moving forward with the audits of contracts awarded for COVID-19 related spending. They continue to enhance the effectiveness of their anti-monetary laundering/counter financing of terrorism (AML/CFT) framework and progress in completing their action plan with the Financial Action Task Force (FATF).” IMF added Further.
Pakistan entered a $6 billion IMF program in 2019. Pakistan and the IMF have been working to implement IMF-supported economic reforms; in particular tax collection, aimed at stabilizing the economy and shoring up a yawning fiscal deficit.
Though the bailout program was still pending, Pakistan received $1.4 billion in emergency financing from the IMF; to allow it to fund targeted and temporary spending increases aimed at containing the pandemic and mitigating its economic impact.
Authorities are counting on the IMF release of a $500M package to bolster Pakistan’s fiscal position and increase global confidence in its economy.
