According to sources informed Geo News on Thursday, Pakistan has been reminded that it needs to meet the targets set with the International Monetary Fund (IMF) under the terms of a $3 billion Stand-By Agreement, which was signed in October.
A two-week-long round of talks on the second tranche under the SBA were led by a team of IMF officials headed by Nathan Porter, who arrived in Pakistan a day earlier.
A meeting was held between the caretaker Finance Minister Dr Shamshad Akhtar, State Bank of Pakistan Governor Jameel Ahmad, and top officials of the Federal Bank of Pakistan (FBR) today to introduce the delegation to the IMF.
According to sources who spoke to Geo News on the condition of anonymity, Pakistani officials were applauded by the IMF delegation for the steps that had been taken by the country, however they stressed that Pakistan should adhere strictly to all the targets.
It has been confirmed by Dr Akhtar that all the conditions of the loan programme have been met so far, while at the same time he has assured the IMF that targets are being met under the loan programme.
Earlier this week, The News reported that the finance ministry had evaluated the progress that had been made on key targets, including the disbursement of Rs87.5 billion as part of Benazir Income Support Programme (BISP) cash transfers to beneficiaries.
A quantitative criteria used by the IMF had set a ceiling of Rs4,000 billion for government guarantees in relation to the new target, but the Ministry of Finance was able to limit the total amount of government guarantees to Rs3,853 billion by the end of September 2023. In actuality, Pakistan’s external financing needs would be the real bone of contention in the course of the review talks.
There may also be a problem with the functioning of the forex market, as the IMF has positioned the withdrawal of the circular on prioritising the provision of forex for certain types of imports introduced in December 2022 under the structural benchmarks. Due to the IMF’s desire to ensure that “full market determination of the exchange rate” is to be achieved, it was placed under structural benchmarks.
It has been noted by the finance ministry that progress has been made with regard to quantitative performance criteria, continuous performance criteria, indicative targets, and structural benchmark conditions that have been agreed with the IMF for end of September 2023 throughout the $3 billion Small Business Administration programme.
In addition to this, the government has also managed to keep the circular debt of the power sector within its envisioned limits, with the circular debt having increased by Rs227 billion in the first quarter and reaching Rs2.5 trillion by the end of September 2023.
The News reported on Monday that the government has achieved the target it set with the IMF to increase circular debt as part of the revised circular debt management plan (CDMP),” a government official said.
According to the official who spoke with us, the government has provided cash transfers to the beneficiaries under the BISP up to September 2023, against the envisaged target of Rs87.5 billion for cash transfers. Moreover, he indicated that the unconditional cash transfer, as well as the conditional transfer, fell well within the desired goal.
BISP will disburse its next installment to beneficiaries in November 2023, after which the cumulative disbursement for the duration of the programe will reach Rs185 billion, according to the official. BISP is expected to disburse 460 billion rupees during the current fiscal year based on the government’s target.
According to officials from the State Bank of Pakistan (SBP), the country is well on the way to meeting its target of a negative $14.5 billion amount of net international reserves (NIR) by the end of September 2023, which is under the floor set by the IMF.
During the end of September 2023, the ceiling on the net government budgetary borrowing from the SBP remained at Rs4,078 billion as the government continued to borrow no money from the central bank.
Despite failing to meet its indicative target of collecting Rs1,977 billion in tax revenues by the end of September 2023, the FBR has managed to collect Rs1,977 billion in tax revenues so far. There is a limit of Rs32 billion that can be accumulated in tax refund arrears before the ceiling is reached.
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