Pakistan and the International Monetary Fund (IMF) made significant progress toward reaching a staff-level agreement on the first review of a $7 billion loan program, IMF Mission Chief Nathan Porter said in a statement on Saturday.
The IMF team had landed in Pakistan on February 24 for talks on the review of the 37-month Extended Fund Facility and climate financing. If the staff-level agreement is reached on both and approval is received from the international lender’s Executive Board, Pakistan will receive $2 billion.
During the latest visit, the IMF team met with officials from the Ministry of Finance, Ministry of Energy, Ministry of Commerce, Federal Board of Revenue, State Bank of Pakistan, provincial officials, and foreign diplomats stationed in Pakistan.
On the conclusion of the visit, Porter said the two sides had made significant progress.
"Program implementation has been strong, and the discussions have made considerable progress in several areas including the planned fiscal consolidation to durably reduce public debt, maintenance of sufficiently tight monetary policy to maintain low inflation, acceleration of cost-reducing reforms to improve energy sector viability, and implementation of Pakistan’s structural reform agenda to accelerate growth, while strengthening social protection and rebuilding health and education spending,” he said in a statement.
"Progress has also been made in discussions on the authorities’ climate reform agenda, which aims to reduce vulnerabilities from natural disasters-related risks, and accompanying reforms which could be supported under a possible arrangement under the Resilience and Sustainability Facility (RSF),” he added.
Pakistan and the IMF will continue policy discussions virtually to finalize the talks over the next few days, he added.
Pakistan’s measures
The country had taken several measures prior to the IMF’s visit, including addressing the thorny issue of agricultural tax imposed by all provinces and reducing subsidies in the energy sector.
The government has assured the IMF that it will collect taxes from the provinces, including imposing corporate tax on farm income.
The government has formulated rules and regulations for the agriculture sector, and the Civil Service Act and right-sizing plan have also been presented to the IMF team.T
he government presented the latest data on tax filers, which has surpassed six million, a figure appreciated by the IMF. The government aims to further increase this number.
The government also assured the IMF that it would provide much-needed protection to the social sector and take steps to reduce circular debt and losses incurred by state-run companies. Additionally, the government plans to accelerate the privatization process.
