Tag: Standby Arrangement

  • Final hurdle cleared: Pakistan on verge of securing IMF tranche

    Final hurdle cleared: Pakistan on verge of securing IMF tranche

    Pakistan is on track to receive the final installment of the $3 billion standby arrangement following the country’s officials meeting the economic performance criteria outlined by the International Monetary Fund (IMF), as per reports.

    Reports indicate that the IMF mission in Pakistan has concluded its review and is preparing to announce an agreement with the government for the disbursement of the last installment, totaling $1.1 billion.

    If successful, the agreement will be presented to the IMF executive board in April for their ultimate approval.

    This development follows recent discussions suggesting that negotiations with the global lending institution may be prolonged due to the parties failing to reach a consensus.

    It’s noted that the IMF has urged the government to regulate and tax cryptocurrency and other online trading platforms.

    Additionally, discussions between Pakistan and the IMF have included talks on privatising financially struggling state-owned enterprises, with Pakistan International Airlines being a priority for privatisation.

    Earlier, the government declined the IMF’s proposal to revisit the National Finance Commission (NFC) Award, citing constitutional concerns.

    The IMF had suggested reviewing the NFC Award during the second round of talks, citing a shortage of federal funds.

    Government sources said that any recommendation on the NFC Award that contradicts the constitution will not be endorsed.

    Pakistan managed to avoid a potential sovereign default after the previous coalition government, led by Pakistan Muslim League-Nawaz (PML-N), reached a staff-level agreement with the IMF on a $3 billion SBA.

    Finance Minister Muhammad Aurangzeb expressed Pakistan’s intention to secure a larger and more enduring program with the IMF, aiming to align with the country’s quota. He made these remarks while speaking to reporters in Islamabad on March 13.

  • 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 gears up for crucial IMF talks on $3 billion SBA programme

    Pakistan gears up for crucial IMF talks on $3 billion SBA programme

    Pakistan is set to commence vital discussions with the International Monetary Fund (IMF) concerning the completion of the second review under the $3 billion Standby Arrangement (SBA) programme.

    The formal invitation to the Washington-based lender is expected to be dispatched shortly after the formation and oath-taking of the federal cabinet, with negotiations anticipated to commence in the coming week.

    Simultaneously, Pakistan plans to request a new deal under the 36-month Extended Fund Facility (EFF).

    Sources have indicated that the size of the upcoming EFF programme is yet to be finalized, but Islamabad aims to explore the inclusion of climate finance to potentially increase the programme’s magnitude from $6 billion to $8 billion.

    A significant challenge facing the incoming finance minister is the pursuit of the Federal Board of Revenue’s (FBR) tax collection target of Rs890 billion for March 2024. Failure to meet this quarterly (Jan-March) target with the IMF may prompt additional taxation measures for the remaining fiscal year.

    Prime Minister Shehbaz Sharif chaired a high-level meeting on Tuesday to receive a comprehensive briefing from the FBR team on the future strategy for revamping the taxation system.

    The FBR has, to date, collected Rs5.82 trillion in the first eight months of the current fiscal year, experiencing a shortfall of Rs33 billion in achieving the February 2024 monthly target.

    To meet the targeted Rs9.415 trillion by June 30, 2024, the FBR must collect Rs3.58 trillion in the remaining four months (March-June) period.

    March 2024 holds particular significance, with the monthly target of Rs890 billion crucial for fulfilling the agreed third-quarter (Jan-March) period with the IMF.

    PM Shehbaz emphasized the immediate commencement of automation and digitization of the FBR, personally committing to monitor the entire process.

    According to The News, he urged the adoption of international best practices to enhance transparency, increase tax collection, and eradicate tax evasion, corruption, and smuggling.

    Expressing dissatisfaction with the current progress, PM Shehbaz directed the FBR to start the automation and digitization process immediately, urging the acquisition of services from international firms. He stressed the appointment of officers based on merit in the Track and Trace system.

    During the meeting, FBR Chairman Malik Amjad Tiwana briefed the prime minister on measures taken towards automation, tax net expansion, refund payments to exporters, and anti-smuggling efforts.

    PM Shehbaz, however, insisted on immediate progress, highlighting the collaboration with the Ministry of Interior and the Pakistan Army to combat smuggling effectively.

    As the meeting concluded, PM Shehbaz praised the efforts of caretaker finance minister Dr. Shamshad Akhtar and her team, commending their adherence to the policies laid by the previous government to avert default.

    The prime minister expressed confidence in achieving progress and prosperity through diligent efforts and adherence to the right direction.

    The meeting, attended by key officials, emphasized the urgency of digitalized invoicing and the inclusion of 1.5 million more individuals into the tax net, underlining the government’s commitment to fostering economic stability and growth.

  • Pakistan expects positive outcome in talks with IMF, eyes $700 million disbursement

    Pakistan expects positive outcome in talks with IMF, eyes $700 million disbursement

    Pakistan is optimistic about the successful completion of the initial review under the $3 billion standby arrangement (SBA) with the International Monetary Fund (IMF). 

    According to reports, the ongoing negotiations, now in their final phase, are anticipated to culminate positively, marking a crucial milestone. 

    Commencing on Monday, policy-level discussions between Pakistani authorities and the IMF are scheduled to persist until November 15, spearheaded by Finance Minister Shamshad Akhtar.  

    The Pakistani delegation, including key figures such as State Bank of Pakistan Governor Jameel Ahmad and Federal Board of Revenue Chairman Malik Amjed Zubair Tiwan, along with representatives from the finance and energy ministries, has been actively engaged in the deliberations. Nathan Porter leads the IMF team in this dialogue. 

    During the latest session, the IMF delegation articulated their recommendations and requirements, while technical-level talks involved the sharing of pertinent economic data with the international lender’s team, according to The News.  

    Sources within the finance ministry assert that Pakistan has diligently fulfilled all stipulated conditions set forth by the IMF. 

    It is anticipated that the staff-level agreement will be finalised during the ongoing policy-level talks, paving the way for the disbursement of approximately $700 million to Pakistan upon the successful completion of the first review. 

    Earlier this month, the IMF review mission commended the Pakistani government for its commendable progress towards economic recovery, as stated by the finance ministry.  

    The IMF’s $3 billion loan programme, sanctioned in July, played a pivotal role in averting a sovereign debt default. The initial tranche of $1.2 billion was disbursed in July, with the remaining amount contingent on subsequent reviews. 

    Finance Minister Shamshad Akhtar has unequivocally ruled out any requests to the IMF for an extension of the SBA programme’s timeframe or an increase in its size. 

  • 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.