Pakistan, IMF reach staff-level agreement

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Tarin says Govt to ensure legislation for SBP autonomy; Petroleum prices likely to go up again; Govt will levy taxes worth Rs365b on fuel

 Observer Report
Washington/Islamabad

Pakistan and the International Monetary Fund have reached a staff-level agreement on revival of $6 billion Extended Fund Facility that was suspended in April this year.

“The Pakistani authorities and IMF staff have reached a staff-level agreement on policies and reforms needed to complete the sixth review under the EFF,” read a statement issued by the Fund.

“The agreement is subject to approval by the Executive Board, following the implementation of prior actions, notably on fiscal and institutional reforms.

Completion of the review would make available SDR 750 million (about US$1,059 million), bringing total disbursements under the EFF to about US$3,027 million and helping unlock significant funding from bilateral and multilateral partners.

Despite a difficult environment, the IMF noted that progress continues to be made in the implementation of the EFF-supported programme.

All quantitative performance criteria for end-June were met with wide margins, except for that on the primary budget deficit, it added.

“Notable achievements on the structural front include the finalization of the National Socio-Economic Registry update, parliamentary adoption of the National Electric Power Regulatory Authority Act Amendments, notification of all pending quarterly power tariff adjustments, and payment of the first tranche of outstanding arrears to independent power producers to unlock lower capacity payments fixed in renegotiated power purchase agreements,” the statement said.

“The authorities have also made progress in improving the anti-money laundering and combating the financing of terrorism framework, although some additional time is needed to strengthen its effectiveness.

Meanwile, Prime Minister’s Advisor on Finance Shaukat Tarin, addressing a news briefing, said that negotiations between Pakistan and the International Monetary Fund have successfully reached to an understanding under which the IMF will provide one billion dollars to Pakistan.

Addressing newsmen, along with Energy Minister Hammad Azhar in Islamabad on Monday evening, he said the IMF emphasises on bringing transparency to the governance of State Owned Enterprises, easing tax laws, and focusing on targeted subsidy.

Shaukat Tarin said Pakistan had already agreed with the International Monetary Fund to increase the price of electricity.

The PM’s aide said that it was an “uphill task to back out from the programme after the receipt of $500 million from the Fund.” The Advisor said the IMF has also recommended some prior actions, including imposition of petroleum levy, rationalization of the State Bank of Pakistan act, audit of Covid-19 pandemic expenditure, and the detail of beneficial owners of anti-Covid vaccine manufacturing companies.

 

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