The Pakistan government reached an agreement with the International Monetary Fund (IMF) on Monday for the disbursement of a tranche of $506 million next month as part of the $6.8 billion package under the Extended Fund Facility.
After the signing of the agreement, Finance Minister Ishaq Dar announced at a press conference the withdrawal of tax exemptions totaling over Rs100 billion ($982m), adjustments in energy tariffs and a cut in subsidies during the next financial year, APP reported.
At the joint news conference with IMF mission chief to Pakistan, Harald Finger, the finance minister set a new target to take the country’s foreign exchange reserves to a record $18.5b by the end of Ramazan. aHe asserted that multilaterals like the IMF “are Pakistan’s development partners. They are not our masters”.
Finger confirmed “staff-level agreement” with Pakistani authorities and set out a four-point policy agenda for the government to move into growth mode after achieving macro-economic stability in its first two years. He, however, agreed that there was no ‘silver bullet’ to fix the economy and reforms required staying course.
Key Priorities
“Key priorities for the second half of the (IMF) program include improving the energy sector, widening the tax net to create space for infrastructure investment and social assistance, improving business climate and further strengthening external reserve buffers,” said Finger, adding that strong implementation of reforms in these areas, as envisaged in the program, would transform Pakistan into a dynamic market economy.
He forecast Pakistan’s economy to grow by 4.1 percent this year and 4.5 percent next year.
The finance minister said the staff level agreement on the seventh review of the $6.6b extended Fund facility would be taken to the IMF management and then for approval by its executive board. “Hopefully, $360b Statutory Drawing Rights or around $506b should be released to Pakistan within June,” he said.
