International Monetary Fund (IMF) and Pakistan have finally reached as staff level agreement after final round of talks today for the release of $1.1 billion tranche under the Stand By Agreement (SBA).
The staff-level agreement is subject to approval by the IMF Executive Board.
The lender will release the final tranche of bailout funds that crisis-hit Pakistan secured last year, to avoid debt default. Lately, IMF’s mission was in Pakistan where it held meetings with Pakistani officials during five-day visit to review fiscal consolidation benchmarks set for the loan.
In a communiqué, IMF acknowledged improvement in Pakistan’s economic and financial position since the first review, with growth and confidence continuing to recover.
IMF predicted Pakistan growth to be modest in 2024 while inflation remains well above target, and ongoing policy and reform efforts are required to address the economic vulnerabilities amidst the ongoing challenges posed by elevated external and domestic financing needs and an unsettled external environment.
It said the new government is committed to continuing the policies initiated under the current program with the IMF to strengthen economic and financial stability for the remainder of this year.
IMF said Pakistani authorities are looking to achieve FY24 general government primary balance target, broaden the tax base, and implement power and gas tariff adjustments to prevent the accumulation of circular debt.
The multilateral lender mentioned that Pakistan expressed interest in securing a medium term fund facility.
It said authorities showed interest in successor medium-term Fund-supported program with aim of permanently resolving Pakistan’s fiscal and external sustainability weaknesses, strengthening its economic recovery, and laying the foundations for strong, sustainable, and inclusive growth.
