Pakistan's interim Finance Minister, Dr. Shamshad Akhtar, has highlighted the critical role of the International Monetary Fund (IMF) in maintaining the country's economic stability, following a recent staff-level agreement. The government is set to increase gas prices in January 2024 to tackle circular debt in the energy sector, while also preparing for the timely repayment of a maturing bond in April 2024.
Akhtar underscored the persistent economic instability in Pakistan, despite some progress, and emphasized the importance of continued financial support from the IMF. She indicated that after concluding a review of the ongoing $3 billion IMF stand-by agreement, which will see Pakistan receive $700 million as a second tranche, there is a potential need for another Extended Fund Facility. However, she noted it might be too early to discuss this option.
The minister's immediate focus is on securing the final tranche of $1.1 billion under the current facility to aid the incoming government. She committed to regular tariff adjustments and stressed adherence to a market-determined exchange rate and responsive monetary policy targeting core inflation.
Akhtar expressed optimism about meeting tax collection targets and highlighted a shift in IMF management's approach as no prior action was required before approving the staff-level agreement this time. This move brings total releases under the $3 billion program to $1.9 billion, leaving $1.1 billion pending for the final review.
Despite high interest rates and costly market conditions leading to a delay in issuing a new $1.5 billion international bond, Akhtar reassured that external financing would not be an issue. The inflow expected in December is set to boost foreign exchange reserves, with Secretary Finance Imdad Ullah Bosal confirming advanced talks for commercial borrowing.
The government is seeking $2 billion from the World Bank this fiscal year and has an additional $1 billion in various accounts. Furthermore, at the end of November, a policy for state-owned enterprises' privatization was approved without imposing new taxes on real estate and retailers.
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