ISLAMABAD - Pakistan is optimistic to receive the next tranche from the International Monetary Fund (IMF) as it has completed all prior actions.
The IMF would review the implementation on the targets during the loan negotiations under the second review of the $3 billion bailout package. The IMF review mission would visit Pakistan after formation of the new federal cabinet. “I’m not going to comment on politics. Only to say that the IMF stands ready, as I said, to send a mission after a new cabinet is formed, and we look forward to working with the government to ensure stability, macroeconomic stability, for the good of the people of Pakistan,” the IMF spokesperson said recently.
An official of the ministry of finance informed that the government has completed all the actions, which were required for the next tranche of the Stand-by Arrangement with Pakistan, which would complete in next month (April). Pakistan had already $1.9 billion from the IMF in two tranches. He said that the government has restricted the circular debt of the power and gas sectors, which were main requirements of the IMF. The government has massively increased the gas prices in February on the direction of the IMF.
In the fiscal sector, the government has controlled the budget deficit, according to the official. However, the Federal Board of Revenue (FBR)’s tax collection had faced a shortfall in the second consecutive month in Feb¬ruary. The tax collection target for the month of February 2024 was set at Rs714 billion. Keeping in view the monthly collection of Rs681 billion during February 2024, the monthly shortfall has increased to Rs33 billion. In January 2024, the FBR had suffered a shortfall of Rs9 billion. According to a tweet of the FBR, the FBR has surpassed an eight-month target of Rs5,829 billion and registered a growth of 30 per cent. Dur¬ing February 2024, the FBR collected Rs681 billion against Rs519 billion collected during February 2023, reg¬istering a growth of 32 per cent.
In a strange coincidence, the IMF programme was designed in a way that each of three governments including PDM, caretaker and new government, each would receive one tranche from the Fund in the nine-month programme.
It is worth mentioning here that the government had budgeted $17.619 billion from multiple financing sources for the current fiscal year including $17.384 billion loans and $234.60 million grants. However, the government received only 46.31 percent ($8.16 billion) in the period from July to December in the current financial year. The country has received $5.96 billion in budget and project financing and another $2.2 billion came in State Bank of Pakistan’s account. The inflows helped in building the country’s foreign exchange reserves, which earlier were depleting. The major financing $3 billion came from Saudi Arabia and the United Arab Emirates (UAE). The IMF disbursed $1.2 billion.
According to the IMF, the SBA supported program underpins the authority’s efforts to stabilize the economy with a strong emphasis on protecting the most vulnerable segments of the population.
During the period of the caretaker government, the authorities have maintained economic stability through strict adherence to the fiscal targets while protecting the social safety net, maintaining a tight monetary policy stance to control inflation, and continuing to build foreign exchange reserves. And this has been done at the same time as implementing timely adjustments in tariffs to shore up the viability of the energy sector.
The IMF stands ready to hold a mission for the second review of the Stand-by shortly after a new cabinet is formed. The focus, therefore, is currently on completion of the current Stand-by program, which ends in April 2024. We look forward to working with the new government on policies to ensure macroeconomic stability.
