- IMF, Pakistan discusses the reduction in public debt, the decline in inflation.
- Progress made in discussions on the Islamabad climate reform program.
- Govt looking at $ 2.2 billion on an increased efficient efficiency.
Islamabad: Pakistan and the International Monetary Fund (IMF) have made significant progress to reach a staff level (ALS) on the first 7 billion dollar loan exam.
“The IMF and the Pakistani authorities have made significant progress to achieve a staff level agreement (SLA) on the first examination under the prolonged agreement of 37 months under prolonged funding (EFF),” the IMF mission chief in Pakistan Nathan said on Friday.
The IMF team, led by Porter, was in Pakistan from February 24 to March 14 to organize discussions on the first review of the Pakistan Economic Program supported by the EFF and the possibility of a new arrangement as part of the resilience and sustainability of the lender (RSF).
The country’s latest loan program, guaranteed by the government of Prime Minister Shehbaz Sharif last year, played a key role in stabilization of the Pakistan economy and that the government said the country was underway for a long -term recovery.
If the IMF approves the first loan exam, the country is online to receive around 1 billion dollars as the second episode of the loan package.
Stressing the “strong” implementation of Pakistan of the rescue package, Porter said that discussions between the two parties “have made considerable progress in several areas.
These areas included the budgetary consolidation planned to durably reduce public debt, the maintenance of a monetary policy close enough to maintain low inflation, the acceleration of reductive reforms to improve the viability of the energy sector and the implementation of the country’s structural reform agenda to accelerate growth, while strengthening social protection and the reservation of health and education expenses.
The IMF official has also noted progress in discussions concerning the Islamabad climate reform program which aims to reduce the vulnerabilities of the risks linked to natural disasters as well as the reforms which could be supported by a possible arrangement under the RSF.
The declaration of the chief of the mission refers to the official request of Pakistan, made in October 2024, for approximately $ 1 billion under the resilience and Sustainability Trust (RST).
In addition, Porter said that the two parties “continue the political discussions practically to finalize these discussions in the coming days”.
Develop the IMF examination mission in an interview with Geo News Finance Minister Muhammad Aurangzeb said Pakistan has actually implemented the loan program.
Confirming significant progress in IMF talks, he added that consultations with the lender would continue next week to obtain fruitful results.
Govt Eyes Liberation up to $ 2.2 billion
With the culmination of the first examination of the 7 billion dollars loan program, Islamabad plans to release $ 2.2 billion under the efficient and increase in climate financing, The news reported on Saturday.
The government is expecting to receive $ 1 billion under the $ 7 billion, with an additional $ 1 billion to $ 1.2 billion which should be approved by the IMF board by the RSF increase – which would bring total disbursement to around $ 2 billion to $ 2.2 billion.
The two -week negotiations between Pakistan and the IMF have led to a broader agreement on a revised framework for macroeconomic and budgetary adjustments for the current financial year. The main macroeconomic projections, including GDP growth, IPC -based inflation and the current account deficit have been revised.
Following these adjustments, the size of the Pakistani economy for the current exercise was revised downwards from RS123 Billion to Rs116.5 Billion. The real projection of GDP growth has also been revised downwards, while the average inflation based on the IPC was adjusted from 12.5% to 7% for the current financial year.
It should be noted that by virtue of the RSF, the Government of Pakistan has agreed to share a number of projects aimed at ensuring climate resilience initiatives. A dedicated fund will be created to finance and execute these projects in the coming years, corresponding to the IMF climate financing objectives.
The IMF agree to delete the Tajir Dost scheme
Meanwhile, the IMF has agreed to delete the Tajir Dost (TDS) diet after the Federal Board of Return (FBR) shared data indicating that the tax collections of retailers, wholesalers and associations of people (AOPS) far exceeded the RS50BN objective initially planned under the program.
Following the wider agreement with the IMF to abandon TDS, the FBR has introduced video analysis rules for electronic surveillance of production processes.
This decision aims to precisely assess the real production levels and to provide more goods in the tax net. Although the IMF mission has concluded its examination talks, no decision has yet been made regarding the FBR request to reduce tax rates for the real estate sector.
A senior government official confirmed the publication that the IMF was convinced to drop the TDS after being presented with data showing that the FBR had collected more than RS400 billion RS in the commercial activities of retailers, wholesalers and PDOs.
With the potential of a new collection of tax revenue in the remaining four months (March to June 2025), the IMF agreed to abandon the TDS, which had proven ineffective from the start.
“We agreed with the IMF that a tax ratio / GDP of 10.6% will be reached during the year 2024-25 in progress, ending on June 30, 2025,” said a senior official. He added that overall nominal growth and the size of the economy has shrunk compared to previous projections, allowing the FBR to reach the desired objective of 10.6% of GDP.
It is estimated that the objective of tax collection of the FBR has been revised downwards from RS12 970 billion to Rs12.350 billion for the current financial year.