By Staff Reporter
KARACHI: The International Monetary Fund’s (IMF) executive board on Monday approved a much-awaited $1.17 billion disbursement to Pakistan after completing the seventh and eighth reviews of the country’s reforms under a stalled $6 billion loan program.
“The IMF Board has approved the revival of our EFF program. We should now be getting the 7th & 8th tranche of $1.17 billion,” the country’s Finance Minister, Miftah Ismail, said on Twitter.
The Fund has also approved a Pakistan request to increase in the size and duration of its $6 billion bailout programme, Ismail said.
“They’ve agreed to extend programme for another one year also enhanced the funding available to Pakistan from $6 billion under this programme to perhaps a little bit more.”
The IMF said its board approved an extension of the EFF until end-June 2023, “rephasing and augmentation of access by SDR 720 million that will bring the total access under the EFF to about US$6.5 billion”.
Pakistan entered the IMF programme in 2019, but only half the funds have been disbursed as Islamabad has struggled to keep targets on track.
The last disbursement was in February and the next tranche was to follow a review in March, but the government of ousted prime minister Imran Khan introduced costly fuel price caps which threw fiscal targets and the programme off track.
IMF in a statement said Pakistan is at a challenging economic juncture.
“Pakistan’s economy has been buffeted by adverse external conditions, due to spillovers from the war in Ukraine, and domestic challenges, including from accommodative policies that resulted in uneven and unbalanced growth,” Antoinette Sayeh, Deputy Managing Director said in the statement. “Steadfast implementation of corrective policies and reforms remain essential to regain macroeconomic stability, address imbalances, and lay the foundation for inclusive and sustainable growth.”
IMF said Pakistan’s plans to achieve a small primary surplus in FY2023 “is a welcome step to reduce fiscal and external pressures and build confidence”. “Containing current spending and mobilizing tax revenues are critical to create space for much-needed social protection and strengthen public debt sustainability.
The Fund added that 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.”
The new agreement follows months of deeply unpopular belt-tightening by the government of Shehbaz Sharif, who took power in April and has effectively eliminated fuel subsidies and introduced new measures to broaden the tax base.
Ismail said government efforts to get the programme back on track via painful corrective economic measures had saved Pakistan from default.
IMF said accelerating structural reforms to strengthen governance, including state-owned enterprises, and improve the business environment would support sustainable growth. “Reforms that create a fair-and-level playing field for business, investment, and trade necessary for job creation and the development of a strong private sector are essential.”
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