AS the monthly Economic Update and Outlook for March 2025 released by the Ministry of Finance expressed satisfaction over progress made on stabilization front, the International Monetary Fund (IMF) announced conclusion of a Staff Level Agreement (SLA) with Pakistan, giving a boost to the efforts of the Government to streamline things ahead of the budget for the next financial year.
Apart from an agreement on the first review of the ongoing 37-month bailout package, Pakistan will also have access to a new $1.3 billion under Resilience and Sustainability Trust (RSF) to support Pakistan’s efforts to mitigate and adapt to climate change.
Pending approval by the IMF Executive Board, Pakistan is set to receive around $1.0 billion (SDR 760 million) under the EFF, bringing total disbursements under the programme to nearly $2.0 billion.
The agreement, therefore, marks another significant step towards strengthening economic stability in the country.
The Government definitely deserves credit for achievements on the economic front despite numerous challenges and expectations of the masses from an elected set-up.
Some circles resorted to rumour mongering when no announcement was made about an SLA on conclusion of negotiations with the IMF delegation but the statement issued by the Fund on Tuesday is reassuring as apart from continuation of the existing programmes, the IMF has also agreed on fresh funding to help the country mitigate effects of the climate change.
One hopes the Government would come out with tangible projects and programmes to address the challenge of climate change, which is also highlighted by drought-like conditions.
Whether it is drought or devastation caused by flash floods, the answer lies in improving water conservation and storage capacity of the country and such projects must receive priority attention by our planners.
As for positive moves on the economic front, it is not sloganeering as acknowledgement has also come again from the IMF, which is minutely analyzing performance in different sectors and on different yardsticks.
The latest statement from the IMF said the Pakistani authorities remained “committed to advancing a gradual fiscal consolidation to sustainably reduce public debt,” along with tight monetary policy, cost-cutting measures and reforms.
According to the IMF, Pakistan’s economic reform agenda is being effectively implemented and the Government committed to gradually reducing the fiscal deficit and curbing inflation through stringent monetary policies.
Furthermore, reforms in the energy sector are being introduced to lower costs and enhance stability.
At the same time, the government is accelerating broader economic reforms to promote growth.
Through the new RSF agreement, Pakistan will receive support to strengthen its resilience against natural disasters, improve budget and investment planning to tackle climate change, ensure the efficient use of water resources, enhance climate risk assessment infrastructure and introduce environmentally sustainable energy sector reforms.
It is, perhaps, for the first time that the country is satisfactorily implementing measures to realize targets as agreed with the IMF and Finance Minister Muhammad Aurangzeb, who is leading these efforts, has, once again, expressed the resolve of the Government to stay the course.
In an interview, he categorically stated that the Government will continue to execute structural reforms with respect to taxation, energy and SOEs to put the country on the trajectory of sustainable productivity and export-led growth.
However, good intentions of the authorities concerned notwithstanding, it is also a reality that the reform process is compounding woes of the general public and the Government cannot remain oblivious to the expectations of the masses for too long.
Apart from announcing much-delayed relief measures, the Government also needs to prepare and embark upon a comprehensive strategy for industrial and agricultural development of the country as fiscal sustainability will remain an elusive dream without increasing exports meaningfully and pursuing policies for import substitution.
An exit strategy should also be in place to get rid of external loans as surging debt repayments leave too little to spend on welfare of the people.
