Islamabad: Pakistan needs another IMF program and support from other multilateral lenders beyond the upcoming election cycle and the ongoing additional arrangement, according to the Washington-based global lender.
Dawn newspaper reported that the International Monetary Fund said this in a 120-page report released on Tuesday, which analyzed the macroeconomic outlook of Pakistan, which is facing a cash crunch.
The report is based on the Memorandum of Economic and Fiscal Policies (MEFP) signed by the Finance Minister Ishaq Dar and State Bank Governor Jameel Ahmed.
“Addressing Pakistan’s Structural Challenges Including Long-Term BoP [balance of payments] Due to the pressures, there will be a need for continued adjustments and lender support beyond the current program period,” the fund said.
The IMF last week gave final approval to a $3 billion bailout program for Pakistan to support the government’s efforts to stabilize the country’s battered economy.
“A potential successor arrangement could help make necessary policy adjustments to restore Pakistan’s medium-term viability and ability to repay,” the report said.
The IMF’s assessment noted that Pakistan’s economic challenges were complex and multi-faceted, and the risks exceptionally high.
“Addressing them requires firm implementation of agreed policies as well as continued financial support from external partners. Consistent and decisive implementation of the program agreements will be essential to mitigate risks and maintain macroeconomic stability,” it said.
According to the report, the government, on its part, has made an international commitment to immediately inform about Rs 5 per unit hike in power tariffs and over 40 per cent increase in gas tariffs, as the gas sector is now reeling under circular debt. competing. power sector deficit
It has committed to address the drivers of circular debt flows in the power sector by notifying the recent tariff hikes prescribed by NEPRA (National Electric Power Regulatory Authority) with effect from 1st July, and notification of quarterly and monthly tariff adjustments without further delay Ready to pick up soon. Additional measures in case fixed revenue targets are missed.
The government has also promised to renegotiate power-purchase agreements with remaining power producers (including Chinese) or extend their debt payment terms.
In the gas sector, the government has committed to immediate notification of gas tariff adjustments determined by Ogra, besides merging gas rates for both local and imported natural gas through weighted average tariffs.
The government has also pledged to limit the fiscal program envisaged in the recent budget and other commitments with the IMF.
For this, the government will not allow supplementary grants for any additional unbudgeted expenditure beyond the parliamentary approved level in the current financial year, at least till the formation of a new government after elections (except in case of severe natural calamity).
The government has also given a commitment “not to introduce any new tax exemptions in 2023-24 or to grant any further new tax exemptions in 2023-24, including through budget or statutory regulatory orders, without prior (Legislative) approval”.
The government has also provided agreements with each province on commitment to achieve fiscal position by the end of FY24 in line with the general government primary balance target of 401 billion rupees for the fiscal year and critically focused immediate energy sector policies which involves not introducing any fuel. Subsidy, or cross-subsidy scheme, from FY23 and onwards.
In addition, the government is committed to ensuring monetary and financial stability by returning to a market-determined exchange rate, reducing inflation to a target, and rebuilding foreign exchange reserves.
It states that the authorities shall refrain from providing guidance or expressing preferences to market participants with respect to the exchange rate, or from regulating the demand for foreign exchange through (formal or informal) administrative action.
Once proper market functioning is restored, the authorities committed to maintain an average premium between interbank and open market rates of not more than 1.25 per cent and not less than minus 1.25 per cent during any five consecutive business day period Has done and daily interbank and published. Open market exchange rates, as reported by Dawn.
The report shows that the payer will have to go back to the next month to take a new loan.
Dawn newspaper reported that the International Monetary Fund said this in a 120-page report released on Tuesday, which analyzed the macroeconomic outlook of Pakistan, which is facing a cash crunch.
The report is based on the Memorandum of Economic and Fiscal Policies (MEFP) signed by the Finance Minister Ishaq Dar and State Bank Governor Jameel Ahmed.
“Addressing Pakistan’s Structural Challenges Including Long-Term BoP [balance of payments] Due to the pressures, there will be a need for continued adjustments and lender support beyond the current program period,” the fund said.
The IMF last week gave final approval to a $3 billion bailout program for Pakistan to support the government’s efforts to stabilize the country’s battered economy.
“A potential successor arrangement could help make necessary policy adjustments to restore Pakistan’s medium-term viability and ability to repay,” the report said.
The IMF’s assessment noted that Pakistan’s economic challenges were complex and multi-faceted, and the risks exceptionally high.
“Addressing them requires firm implementation of agreed policies as well as continued financial support from external partners. Consistent and decisive implementation of the program agreements will be essential to mitigate risks and maintain macroeconomic stability,” it said.
According to the report, the government, on its part, has made an international commitment to immediately inform about Rs 5 per unit hike in power tariffs and over 40 per cent increase in gas tariffs, as the gas sector is now reeling under circular debt. competing. power sector deficit
It has committed to address the drivers of circular debt flows in the power sector by notifying the recent tariff hikes prescribed by NEPRA (National Electric Power Regulatory Authority) with effect from 1st July, and notification of quarterly and monthly tariff adjustments without further delay Ready to pick up soon. Additional measures in case fixed revenue targets are missed.
The government has also promised to renegotiate power-purchase agreements with remaining power producers (including Chinese) or extend their debt payment terms.
In the gas sector, the government has committed to immediate notification of gas tariff adjustments determined by Ogra, besides merging gas rates for both local and imported natural gas through weighted average tariffs.
The government has also pledged to limit the fiscal program envisaged in the recent budget and other commitments with the IMF.
For this, the government will not allow supplementary grants for any additional unbudgeted expenditure beyond the parliamentary approved level in the current financial year, at least till the formation of a new government after elections (except in case of severe natural calamity).
The government has also given a commitment “not to introduce any new tax exemptions in 2023-24 or to grant any further new tax exemptions in 2023-24, including through budget or statutory regulatory orders, without prior (Legislative) approval”.
The government has also provided agreements with each province on commitment to achieve fiscal position by the end of FY24 in line with the general government primary balance target of 401 billion rupees for the fiscal year and critically focused immediate energy sector policies which involves not introducing any fuel. Subsidy, or cross-subsidy scheme, from FY23 and onwards.
In addition, the government is committed to ensuring monetary and financial stability by returning to a market-determined exchange rate, reducing inflation to a target, and rebuilding foreign exchange reserves.
It states that the authorities shall refrain from providing guidance or expressing preferences to market participants with respect to the exchange rate, or from regulating the demand for foreign exchange through (formal or informal) administrative action.
Once proper market functioning is restored, the authorities committed to maintain an average premium between interbank and open market rates of not more than 1.25 per cent and not less than minus 1.25 per cent during any five consecutive business day period Has done and daily interbank and published. Open market exchange rates, as reported by Dawn.
The report shows that the payer will have to go back to the next month to take a new loan.