Tag: loan program

  • IMF mission to arrive tomorrow for final review discussions on Pakistan’s SBA

    IMF mission to arrive tomorrow for final review discussions on Pakistan’s SBA

    The International Monetary Fund (IMF) mission is poised to commence vital economic review discussions from March 14 to 18, 2024, marking the conclusive evaluation of Pakistan’s Standby Arrangement (SBA).

    Sources within the Finance Ministry have confirmed that the IMF mission is scheduled to touch down in Pakistan tomorrow night, kickstarting a series of pivotal discussions set to unfold over the next four days.

    During this intensive period, the IMF mission is slated to engage in comprehensive dialogue with Pakistan’s economic team. Key participants include representatives from the Finance Ministry, Energy Ministry, Federal Board of Revenue (FBR), State Bank of Pakistan (SBP), Planning Commission, and the Petroleum Division.

    Insiders suggest that the IMF mission will delve into discussions covering a spectrum of economic facets. Talks are expected to encompass various critical sectors, including finance, energy, taxation, and central banking.

    Furthermore, in parallel with these discussions, preliminary conversations are anticipated to unfold regarding the potential initiation of a new loan programme with the IMF mission. This prospect adds an extra layer of significance to the ongoing economic deliberations as Pakistan navigates its financial landscape in the pursuit of sustainable economic growth.

    Stay tuned for comprehensive coverage as the IMF mission engages in the final review of Pakistan’s Standby Arrangement, paving the way for crucial decisions that could shape the nation’s economic trajectory in the coming months.

  • Pakistan grapples with massive Rs63.4 trillion debt

    Pakistan grapples with massive Rs63.4 trillion debt

    In November 2023, Pakistan’s total debt soared to an alarming Rs63.399 trillion, marking a significant increase from Rs50.959 trillion in the same month of the previous year. 

    According to details, this surge comprises Rs40.956 trillion in domestic loans and Rs22.434 trillion in international loans.

    The recent development follows Pakistan’s commitment to the International Monetary Fund (IMF) for a new loan programme. 

    As outlined in the Memorandum of Economic and Financial Table, Pakistan has pledged to boost foreign reserves to $13.6 billion in FY2024–25, facilitating access to the IMF’s financial assistance.

    To support its financial strategy, Pakistan is planning to roll over a $6.34 billion loan in the upcoming fiscal year, coupled with a targeted increase of $1.31 billion in foreign investments, as highlighted by the MEFPT. 

    These measures aim to navigate the country through its evolving economic landscape.

  • Pakistan expected to increase petroleum levy to get IMF loan 

    Pakistan expected to increase petroleum levy to get IMF loan 

    Pakistan has reportedly provided assurances to the International Monetary Fund (IMF) regarding an augmentation of the petroleum levy in the fiscal year 2024–25, aligning with its intentions to embark on a new loan programme. 

    According to documentation cited by sources within the finance ministry, Pakistan has committed to elevating the petroleum levy to Rs1,065 billion in FY2024–25, anticipating a revision of the current levy target from Rs869 billion to Rs918 billion.  

    The attainment of the revised target is contingent upon an uptick in the consumption of petroleum products. 

    The sources additionally revealed that the caretaker government would have implemented a Presidential Ordinance if adjustments were to be made to the current petroleum levy target. 

    Earlier revelations indicate that Pakistan is poised to secure another financial assistance package from the International Monetary Fund (IMF) subsequent to the conclusion of the existing standby agreement. 

    The caretaker government has initiated consultations in preparation for the forthcoming IMF programme. 

    Sources have indicated that talks between the government and the IMF for the new loan programme are likely to commence this month.  

    Finance ministry officials underscored the commitment of the elected government to advance the measures established by the caretaker government. 

  • Pakistan on track to secure second IMF tranche successfully: PM Kakar

    Pakistan on track to secure second IMF tranche successfully: PM Kakar

    Caretaker Prime Minister Anwaar ul Haq Kakar expressed optimism about Pakistan’s upcoming review with the International Monetary Fund (IMF), set for this month.

    The IMF, led by Nathan Porter, will visit Pakistan from November 2–16 to discuss the first review of the country’s current $3 billion stand-by arrangement (SBA).

    Pakistan is navigating a challenging economic recovery path under a caretaker government following an IMF loan programme approval in July, which prevented a sovereign debt default. The country received the first $1.2 billion tranche from the IMF in July.

    Kakar stated that Pakistan has successfully achieved its targets, including revenue goals, and is confident about the negotiations for the second tranche.

    Regarding inflation, the interim prime minister acknowledged a decrease in inflation rates, attributing it to the Pakistani rupee’s appreciation against the dollar and a drop in petroleum prices. 

    The prime minister also encouraged journalists to analyse the impact of the Pakistani rupee’s strength on circular debt and highlighted that stringent measures against smuggling through Afghan transit trade have boosted local industry productivity.

  • IMF team to visit Pakistan next week for crucial $3 billion SBA assessment

    IMF team to visit Pakistan next week for crucial $3 billion SBA assessment

    A delegation from the International Monetary Fund (IMF) is scheduled to visit Pakistan on November 2 to initiate discussions pertaining to the inaugural assessment of the nation’s ongoing $3 billion standby arrangement (SBA). 

    Pakistan is currently navigating a complex journey towards economic recovery, operating under an interim government. 

    This endeavour follows an IMF loan programme sanctioned in July, which was instrumental in averting a potential sovereign debt default. As part of this programme, Pakistan received an initial disbursement of $1.2 billion from the IMF in July.

    Esther Perez Ruiz, the IMF’s resident representative in Pakistan, has disclosed that a delegation led by Mr Nathan Porter from the International Monetary Fund will embark on a mission to Pakistan commencing on November 2, with the primary objective being the evaluation of the current Stand-By Arrangement.

    Additionally, the finance ministry has exerted significant efforts to maintain the budget deficit within the predefined limits agreed upon with the IMF. They issued warnings to the provinces, urging them to curtail their expenditures. Recent provisional estimates indicate that both Punjab and Sindh have made notable strides in this direction.

    However, a notable challenge in the quest to contain the overall fiscal deficit lies in the escalating debt servicing requirements. These obligations are projected to surpass Rs8.3 trillion and reach Rs8.5 trillion for the current fiscal year 2023–24. This surge is attributed to the central bank’s heightened policy rate, a departure from the initial target of Rs7.3 trillion.

  • Pakistan expected to secure second IMF tranche despite missed deadlines

    Pakistan expected to secure second IMF tranche despite missed deadlines

    Pakistan is poised to secure the next installment of its $3 billion stand-by arrangement (SBA) with the International Monetary Fund (IMF), despite potential delays in meeting certain deadlines, as indicated in a recent brokerage report. 

    Topline Securities, in its analysis, acknowledged that Pakistan had achieved the prescribed targets for net international reserves, net domestic assets, and foreign currency swap/forward positions as of the close of June 2023.  

    However, it also pointed out that Islamabad had fallen short in meeting the targets for the primary deficit, which assesses the fiscal balance excluding interest payments as well as external public debt disbursements. 

    Furthermore, the report highlighted that Pakistan had yet to implement a gas price adjustment agreed upon with the IMF, which was a prerequisite for completing the second review of the program. 

    Pakistan initially received a $1.2 billion installment from the IMF’s stand-by arrangement in July after the IMF’s Executive Board approved the bailout package to stabilise the country’s economy.  

    Under the agreement, the remaining $1.8 billion is set to be disbursed in two tranches following reviews in November and February. 

    The current IMF programme outlines nine performance criteria, four indicative targets, and ten structural benchmarks for the upcoming review. 

    In a briefing for analysts on September 14, the Governor of the State Bank of Pakistan confirmed that all quantitative performance targets related to the central bank, including net domestic assets, swaps, and net international reserves, had been met.  

    Similarly, the Finance Ministry expressed its commitment to maintaining fiscal discipline and achieving primary balance targets. 

    Despite challenges and some unmet targets related to external funding, the primary deficit, gas price adjustments, etc., Topline Securities remains optimistic about Pakistan’s chances of receiving the next IMF tranche.  

    They believe that if the government can effectively manage the current account deficit to around $4 billion for FY2024, as opposed to the projected $6.5 billion, it can meet its financing requirements, particularly given the difficulty of commercial borrowing. 

    The Ministry has projected gross external financing requirements of $28.4 billion for the current fiscal year, including the current account deficit of $6.5 billion, aligning with IMF projections outlined in the latest country report. 

    Regarding funding sources, the government plans to secure a total of $11 billion, with $5 billion coming from China and $6 billion from Saudi Arabia, primarily in the form of rollovers and an oil facility with deferred payments, according to Topline’s report.  

    The government also anticipates around $6.3 billion from multilateral creditors, including the World Bank, Asian Development Bank, Islamic Development Bank, and Asian Infrastructure Investment Bank. 

  • IMF delegation to evaluate Pakistan’s economic performance during November visit

    IMF delegation to evaluate Pakistan’s economic performance during November visit

    The International Monetary Fund (IMF) is gearing up for a vital visit to Pakistan, scheduled for November. The purpose of this visit is to assess Pakistan’s economic performance, particularly focusing on the period from July to September.

    Reliable sources in financial circles have shared that this visit is part of an ongoing review following the extension of the loan programme. Representatives from the IMF and the caretaker administration will engage in important discussions to gauge Pakistan’s progress and its adherence to the outlined economic targets.

    Reports from ARY News indicate that Pakistan is on track to receive the next portion of financial assistance, which amounts to $700 million from the $3 billion loan programme. This development underscores Pakistan’s dedication to meeting the IMF’s conditions aimed at boosting economic stability and growth.

    Forecasts suggest that the IMF is set to disburse around $1.8 billion in funds to Pakistan by March 2024. This positive outlook reflects the gradual restoration of investor confidence and the promising trajectory of Pakistan’s economy.

    However, the release of these funds hinges on Pakistan’s successful completion of two critical economic reviews. This underscores Pakistan’s commitment to implementing structural reforms and achieving sustainable economic development.

  • Pakistan Stock Exchange gains over 2,300 points on revived investor confidence after signing IMF agreement

    Pakistan Stock Exchange gains over 2,300 points on revived investor confidence after signing IMF agreement

    The Pakistan Stock Exchange (PSX) experienced a substantial increase of over 2,300 points on Monday, fueled by renewed investor confidence after the signing of a staff-level agreement between Pakistan and the International Monetary Fund (IMF) on Friday.

    At 12:00 pm, the benchmark KSE-100 index of the Pakistan Stock Exchange surged by 2,381 points, currently trading at 43,833 points.

    Market experts attribute this bullish trend in the PSX to the revival of the loan programme with the international lender.

    Last week, Pakistan officially signed a staff-level agreement worth $3 billion with the International Monetary Fund (IMF). The signing ceremony took place in Lahore and was attended by Prime Minister Shehbaz Sharif, Finance Minister Ishaq Dar, and Information Minister Marriyum Aurangzeb.

    The International Monetary Fund (IMF) announced the successful completion of a “Stand-By Arrangement” between the global financial institution and Pakistan.

    The staff-level agreement, valued at $3 billion for a duration of 9 months, was reached through virtual negotiations conducted by IMF Mission Chief Nathan Porter and his team, who maintained continuous communication with Pakistani authorities.

    The final approval of this agreement will be granted by the IMF’s executive board, expected to occur in mid-July. Once approved, Pakistan will be eligible to receive the $3 billion loan.

  • Pakistan lifts import restrictions to satisfy IMF demand

    Pakistan lifts import restrictions to satisfy IMF demand

    In a recent development, the State Bank of Pakistan (SBP) has taken the decision to lift all import restrictions as part of fulfilling a condition set by the International Monetary Fund (IMF).

    The central bank issued a circular to officially end these restrictions, thereby satisfying another requirement put forth by the IMF.

    To facilitate the release of over 6,000 containers, the federal government has granted permission to banks for remittance provision. The circular issued by the SBP states that remittances will be provided for all imports following the implementation of this latest order. The central bank has instructed authorised dealers to process remittances based on the recommendations of stakeholders.

    It came to light yesterday that Pakistan and the IMF are facing challenges in reviving a loan program, leading to disagreements between the Ministry of Finance and the IMF. Sources revealed that the plan to bridge the external financing gap relied on funds received from a donor conference held in Geneva.

    The primary objective of the conference was to garner support and contributions for Pakistan’s financial requirements. As part of this plan, the IMF was tasked with securing $500 million by June through the Geneva Donor Conference. However, efforts to obtain funds for the Ministry of Planning and Treasury have encountered obstacles. Delays in finalising contracts and agreements under the Donor Conference have further impeded the financing process.

    Sources within the Ministry of Finance report that the amount received through the Geneva Donor Conference currently stands at $150 million, falling short of the expected sum. This has raised concerns from the IMF, which has expressed dissatisfaction with the level of financial support obtained through the conference.

    According to ARY News, the funds acquired from the Donor Conference will be allocated to crucial recovery and rehabilitation projects in regions affected by floods. The aim is to address the needs of these communities and provide support for their restoration efforts.

  • Pakistan’s nuclear program not linked to loan negotiations, says IMF representative

    Pakistan’s nuclear program not linked to loan negotiations, says IMF representative

    The International Monetary Fund (IMF) has refuted allegations that it imposed any conditions on the revival of a loan program that had been suspended for several months despite ongoing discussions between the two parties.

    Pakistan has been in discussions with the IMF since early February to negotiate the terms of the deal, which includes the adoption of policies aimed at addressing its fiscal deficit ahead of the annual budget in June. The funds are part of a $6.5 billion bailout package that the IMF approved in 2019, and which experts believe is critical for Pakistan to avoid defaulting on its external debt obligations.

    The delay in reaching a staff-level agreement with the IMF had prompted veteran politicians, Senator Raza Rabbani and former foreign minister Shah Mahmood Qureshi, to express concerns about whether the delay was due to the country’s strategic assets, including its nuclear and missile programs. They have called on the government to clarify this issue.

    In response, IMF resident representative in Islamabad, Esther Perez Ruiz, released a statement on Sunday denying any involvement in Pakistan’s nuclear program, stating that there was “absolutely no truth” to the rumors that program discussions with the authorities may have covered the issue.

    Ruiz further clarified that the discussions had focused exclusively on economic policies aimed at resolving Pakistan’s economic and balance of payments problems, in line with the Fund’s mandate for promoting macroeconomic and financial stability.