Pakistan and the International Monetary Fund (IMF) are likely to sign a Staff Level Agreement next week.
Sources said that Pakistan took advanced steps such as increasing tariffs on gas as well as electricity besides presenting the Finance Supplementary Bill 2023 worth Rs. 170 billion to meet IMF requirements.
IMF is pushing Pakistan for energy sector reforms due to which, the government has approved a revised circular debt management plan, worth Rs. 952 billion.
The sources further said that there is no direct link between the mini-budget with new taxes but to fund power losses adding that the economy will be destroyed if Pakistan cannot overcome the energy sector losses.
Pakistan and IMF have also reached an understanding to reduce expenditure, except on debt servicing.
The IMF has not only asked for a market-determined exchange rate but to give autonomy in deciding independent monetary policy in order to control inflation.
IMF has also asked for $10 billion in foreign reserves, equivalent to two months’ imports, till June 2023. It also agreed to 29% inflation as well as a 2% growth rate during this fiscal year.
The Prime Minister of Pakistan assured the IMF of implementing the agreed reforms agenda.
The IMF’s executive board will approve the $1.1 billion tranche three to four weeks after a staff-level agreement, sources added.
The IMF’s current loan program will expire on June 30, 2023, after receiving a $2.5 billion loan. If necessary, Pakistan will have to make a new application for the new loan program in the next financial year.
“Likely to sign a Staff Level Agreement next week” damn how many times have we seen this headline before in the past few months ending in Dar making a constipated face and no money.