IN a major development, the Government has swiftly clinched a staff level agreement (SLA) with the International Monetary Fund (IMF) under which the cash-starved country would get about $7 billion in three years to, as Fund’s statement put it, “cement macroeconomic stability and create conditions for stronger, more inclusive and resilient growth”. This includes steps to strengthen fiscal and monetary policy and reforms to broaden the tax base, improve state owned enterprises’ (SOE) management, strengthen competition, secure a level playing field for investment, enhance human capital and scale up social protection through increased generosity and coverage in the Benazir Income Support Program (BISP).
Credit for the accelerated deal surely goes to Finance Minister Muhammad Aurangzeb, who led talks with the IMF for the purpose, as he adopted a clear-headed approach on the issue of another bailout package and demonstrated firm resolve to go for necessary reforms, which enabled the country to get the deal in a record time. Last time, the country was pushed to the brink of virtual default due to the state of indecision by the then Government whether or not Pakistan should go to the IMF besides breach of the understanding reached with the Fund. Pakistan initiated a comprehensive multi-dimensional reform process to stabilize its economy and there was consensus among policy makers that the country would need another IMF programme to take the process to the logical conclusion. It was with this thinking that the Government initiated prompt discussions with the IMF for a new loan and lost no time in meeting pre-conditions as was reflected by the budget for 2024-25, which was aimed at qualifying for the long-term deal. The announcement of the IMF regarding a staff level agreement for the purpose would surely have a salutary effect on the economy and send right signals to the business community and prospective investors as well as bilateral donors, who now condition their assistance and cooperation to the ability of Pakistan to satisfy the IMF. Hopefully, the new programme would not face challenges as Prime Minister Shehbaz Sharif, Finance Minister Aurangzeb and Chairman FBR Amjad Zubair Tawana are firm on pursuing the path of increased tax collection through end-to-end digitization of the FBR and other measures like taxing the retail sector; privatization of loss-incurring entities; right-sizing of the ministries and departments; improving management of state-owned enterprises; and reforming the power sector. However, the ground situation demands that interests of the common man must be safeguarded while taking practical measures to help realize these objectives.
