ISLAMABAD: Pakistan received proceeds of $ 1.16 billion (equivalent of SDR 894 million) after International Monetary Fund (IMF) Executive Board completed combined seventh and Eight review under Extended Fund Facility (EFF) for country.

State Bank of Pakistan stated on its official twitter handle that this amount would help improve SBP’s foreign exchange reserves and would also facilitate realisation of other planned inflows from multilateral and bilateral sources. EFF was approved by Executive Board on July 3, 2019 for SDR 4,268 million (about US$6 billion at time of approval, or 210 percent of quota).

In order to support program implementation and meet higher financing needs in FY23, as well as catalyse additional financing, IMF Board approved an extension of EFF until end-June 2023, rephasing and augmentation of access by SDR 720 million that will bring total access under EFF to about $ 6.5 billion. Programme seeks to address domestic and external imbalances and ensure fiscal discipline and debt sustainability while protecting social spending, safeguarding monetary and financial stability, and maintaining a market-determined exchange rate and rebuilding external buffers.   In its handout, the IMF emphasised the need to increase electricity prices and enhance taxes on petroleum products, as per the schedule agreed between Pakistan and the IMF.

“Efforts to strengthen the viability of the energy sector and reduce unsustainable losses, including by adhering to the scheduled increases in fuel levies and energy tariffs, are also essential,” said IMF Deputy Managing Director Antoinette Sayeh. She said that containing current spending and mobilising tax revenues are critical to create space for much-needed social protection and strengthen public debt sustainability. The IMF also stressed that Pakistan should keep following the policy of high interest rates and market-determined exchange rate. In February this year, the previous government had assured the IMF board the resolve to stay on course but hardly a month later, the then government laid the landmines by giving subsidies and introducing another tax amnesty scheme, which led to collapse of Pakistan-IMF talks in March.

The board also waived off the conditions that Pakistan could not meet during January-June 2022 period.

The PTI had tried to spoil the deal by manoeuvring the governments of Punjab and Khyber-Pakhtunkhwa to backtrack from their commitments to the IMF programme in retaliation to the case against Imran Khan under the Anti-Terrorism Act. With the fresh approval, the disbursement would increase to $3.9 billion, leaving a balance of $2.6 billion that will be disbursed till June next year. The next IMF review will now take place in November to take stock of the performance of Pakistan’s economy for the July-September 2022 period.

Published in The Daily National Courier, September, 01 2022

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