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IMF content with new five-year-mandate govt taking ownership of program | SAMAA TV

IMF content with new five-year-mandate govt taking ownership of program

Govt will need to prepare next budget in line with IMF conditions such as increase in power and gas tariffs, new taxes

By: Shakeel Ahmed

March 30, 2024March 30, 2024

The concerns raised by Pakistan Tehreek-e-Insaf (PTI) regarding the new loan program from the International Monetary Fund (IMF) have reportedly been overlooked, according to sources familiar with the matter.

The international financial institution has also indicated at holding a discussion on climate financing. Pakistan is also expected to get an increase in the existing available quota of loans from the IMF.

Despite PTI's reservations, Pakistan is anticipated to proceed with increasing its existing available quota of loans from the IMF.

Sources reveal that the IMF is content with the new coalition government with a five-year mandate taking ownership. Unlike in the past, this time the implementation of the new program would not require guarantees from other opposition parties.

Also Read: Pakistan's weekly inflation shows slight dip

Pakistan is eyeing a new loan program worth $7 to $8 billion from the IMF, with discussions also touching upon climate financing, as indicated by sources.

The application for the new program is slated to be submitted next month, following formal negotiations during the Executive Board meeting. Negotiations for a new three-year loan program from the IMF are expected to extend over two to three months.

The government will need to prepare the next fiscal year budget in line with IMF conditions, incorporating reforms such as increases in electricity and gas tariffs, cost recovery measures, and new tax policies.

Also Read: Nepra notifies Rs2.75 per unit hike in power tariff

Furthermore, assurances have been made regarding maintaining the policy rate until inflation subsides. The sources said that the IMF has emphasized financial stability and collaboration with provinces to enhance revenue resources.

In a significant development, the IMF has declared Pakistan's outstanding debt sustainable, underscoring the country's efforts towards fiscal responsibility. However, sources stress the importance of ensuring external financing to meet debt obligations.

Contrary to previous arrangements, sources indicate that Pakistan does not require additional financing from Saudi Arabia and the UAE for the current IMF program.