The Washington-based International Monetary Fund stated in a 120-page report released Tuesday that Pakistan requires an additional program from the IMF and assistance from other international lenders beyond the current election cycle and the ongoing standby agreement.
The Washington-based International Monetary Fund stated in a 120-page report released Tuesday that Pakistan requires an additional program from the IMF and assistance from other international lenders beyond the current election cycle and the ongoing standby agreement.
The report analyzes the situation in Pakistan macroeconomic perspective and highlights the need for more financial support to address the country’s cash-strapped situation, PTI reported citing dawn newspaper.
The report analyzes the situation in Pakistan macroeconomic perspective and highlights the need for more financial support to address the country’s cash-strapped situation, PTI reported citing dawn newspaper.
The report is based on the Memorandum on Economic and Fiscal Policies (MEFP), which was signed by Pakistani Finance Minister Ishaq Dar and State Bank Governor Jameel Ahmed.
The report is based on the Memorandum on Economic and Fiscal Policies (MEFP), which was signed by Pakistani Finance Minister Ishaq Dar and State Bank Governor Jameel Ahmed.
The fund said: “Resolving Pakistan’s structural challenges, including long-term BoP (balance of payments) pressures, will require continued adjustment and creditor support beyond the current program period.”
The fund said: “Resolving Pakistan’s structural challenges, including long-term BoP (balance of payments) pressures, will require continued adjustment and creditor support beyond the current program period.”
Last week the IMF approved the $3 billion bailout program for Pakistan. The financial assistance is intended to support government initiatives to stabilize the country’s struggling economy.
Last week the IMF approved the $3 billion bailout program for Pakistan. The financial assistance is intended to support government initiatives to stabilize the country’s struggling economy.
“A potential successor arrangement could help anchor the policy adjustment needed to restore Pakistan’s medium-term viability and ability to pay,” the report said.
“A potential successor arrangement could help anchor the policy adjustment needed to restore Pakistan’s medium-term viability and ability to pay,” the report said.
The IMF assessment emphasized that Pakistan’s economic challenges were complex and multifaceted, and that the risks were exceptionally high.
The IMF assessment emphasized that Pakistan’s economic challenges were complex and multifaceted, and that the risks were exceptionally high.
“Addressing them requires strong implementation of agreed policies, as well as continued financial support from external partners. Consistent and decisive implementation of program agreements will be essential to reduce risks and maintain macroeconomic stability,” he said.
“Addressing them requires strong implementation of agreed policies, as well as continued financial support from external partners. Consistent and decisive implementation of program agreements will be essential to reduce risks and maintain macroeconomic stability,” he said.
According to the report, the government committed to an international agreement to report promptly on a $5 per unit increase in electricity prices and a more than 40 percent increase in gas rates. This decision comes as circular debt in the gas sector is now on par with the losses faced by the electricity sector.
According to the report, the government committed to an international agreement to report promptly on a $5 per unit increase in electricity prices and a more than 40 percent increase in gas rates. This decision comes as circular debt in the gas sector is now on par with the losses faced by the electricity sector.
In addition, the government has ensured that it will reassess power purchase agreements with remaining power producers, including those in China, and will consider extending the length of their debt repayment schedules.
In addition, the government has ensured that it will reassess power purchase agreements with remaining power producers, including those in China, and will consider extending the length of their debt repayment schedules.
In the gas sector, the government promised to immediately notify any adjustment in gas rates as determined by the Ogra (Oil and Gas Regulatory Authority). In addition, they plan to merge gas rates for both locally produced and imported natural gas, using a weighted average rate approach.
In the gas sector, the government promised to immediately notify any adjustment in gas rates as determined by the Ogra (Oil and Gas Regulatory Authority). In addition, they plan to merge gas rates for both locally produced and imported natural gas, using a weighted average rate approach.
The government has also provided guarantees to safeguard the fiscal program outlined in the recent budget and other obligations to the IMF.
The government has also provided guarantees to safeguard the fiscal program outlined in the recent budget and other obligations to the IMF.
PTI noted that for this, the government will not allow supplemental grants for any additional unbudgeted spending above the level approved by parliament in the current fiscal year, at least until the formation of a new government after the elections (except in the event of a severe natural disaster).
PTI noted that for this, the government will not allow supplemental grants for any additional unbudgeted spending above the level approved by parliament in the current fiscal year, at least until the formation of a new government after the elections (except in the event of a severe natural disaster).
The government also pledged not to launch any new tax amnesties or grant new tax breaks in 2023-24, even through budget or statutory regulatory orders without prior (assembly) approval.
The government also pledged not to launch any new tax amnesties or grant new tax breaks in 2023-24, even through budget or statutory regulatory orders without prior (assembly) approval.
The government has also provided agreements with each province on their commitment to achieve a fiscal position by the end of fiscal year 24 consistent with the fiscal year general government primary balance target of $401 billion and a continued focus on critically urgent energy sector policies, including no introduction of any fuel subsidy or cross-subsidy scheme, in FY23 and beyond, ITP noted.
The government has also provided agreements with each province on their commitment to achieve a fiscal position by the end of fiscal year 24 consistent with the fiscal year general government primary balance target of $401 billion and a continued focus on critically urgent energy sector policies, including no introduction of any fuel subsidy or cross-subsidy scheme, in FY23 and beyond, ITP noted.
In addition, the government has committed to ensuring monetary and financial stability by returning to a market-determined exchange rate, reducing inflation toward the target, and rebuilding Foreign exchange Bookings
In addition, the government has committed to ensuring monetary and financial stability by returning to a market-determined exchange rate, reducing inflation toward the target, and rebuilding Foreign exchange Bookings
According to the report, the authorities have pledged to refrain from providing guidance or showing preference to market participants regarding the exchange rate. They will also avoid regulating the demand for foreign exchange through formal or informal administrative measures.
According to the report, the authorities have pledged to refrain from providing guidance or showing preference to market participants regarding the exchange rate. They will also avoid regulating the demand for foreign exchange through formal or informal administrative measures.
Once proper market functioning is restored, the government has pledged to keep the average premium between the interbank and open market exchange rates within the range of 1.25 percent and minus 1.25 percent for any period of five consecutive days. Additionally, they will publish the interbank and open market exchange rates daily, as reported by Sunrise.
Once proper market functioning is restored, the government has pledged to keep the average premium between the interbank and open market exchange rates within the range of 1.25 percent and minus 1.25 percent for any period of five consecutive days. Additionally, they will publish the interbank and open market exchange rates daily, as reported by Sunrise.
According to the report, the government will have to approach the donor again next month to apply for a new loan.
According to the report, the government will have to approach the donor again next month to apply for a new loan.
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