The International Monetary Fund (IMF) has unequivocally informed Pakistan about adhering to the targets set under the $3 billion Stand By Agreement (SBA).
Leading the IMF mission, Nathan Porter landed in Pakistan recently to commence the fortnightly discussions about the second tranche under the SBA.
Sources disclosed that in an inaugural meeting, key Pakistani officials, including caretaker Finance Minister Dr Shamshad Akhtar and State Bank of Pakistan Governor Jameel Ahmad, interacted with the IMF delegation. While praising Pakistan’s initiatives, the IMF team stressed the importance of rigid adherence to all set targets. Dr. Akhtar reassured them of Pakistan’s commitment to the agreement’s stipulations.
Key Achievements and Targets
Previously, the finance ministry evaluated progress on certain targets, notably the Rs87.5 billion disbursement under the Benazir Income Support Programme (BISP). The IMF had fixed a cap on the quantum of government guarantees at Rs4,000 billion. Impressively, the ministry kept it to Rs3,853 billion by September 2023. Yet, the looming concern during these talks is Pakistan’s external financing requirements.
The forex market’s operation might become a point of contention due to the IMF’s insistence on removing circular prioritising forex for specific imports. This measure, introduced in December 2022, aimed at ensuring the “full market determination of the exchange rate”. The finance ministry kept track of all the criteria and benchmarks agreed upon under the $3 billion SBA for September 2023.
Moreover, the government efficiently managed the power sector’s circular debt, which witnessed an Rs227 billion surge in Q1, culminating in Rs2.5 trillion by September 2023. An official confirmed meeting the IMF-agreed target concerning the circular debt management plan (CDMP).
As for the BISP, disbursements reached Rs89 billion by September 2023, surpassing the Rs87.5 billion goal. The subsequent instalment, scheduled for November 2023, will elevate the cumulative disbursement to Rs185 billion. A mammoth Rs460 billion has been earmarked for BISP disbursements this fiscal year.
Lastly, State Bank of Pakistan (SBP) officials remain confident about achieving the floor on net international reserves (NIR), projected to be negative $14.5 billion by September 2023. The government’s borrowing from the central bank remained at zero, per the set parameters. The FBR’s indicative collection target was also successfully attained, with net tax revenues touching Rs1,977 billion by September 2023. The cap on the accumulation of tax refund arrears was maintained at Rs32 billion.
