IMF Quarterly Review Talks
ISLAMABAD: Caretaker Finance Minister Dr. Shamshad Akhtar announced that talks with the International Monetary Fund (IMF) for the quarterly review will commence at the end of October to secure the next tranche.
During a briefing to the Senate Standing Committee on Finance and Revenue, she noted that she assumed office on August 17, and at that time, macroeconomic indicators were extremely unfavorable. Inflation had surged to 38%, although she pointed out that it was showing signs of decline.
Dr. Akhtar highlighted that in 2023, inflation had reached a historic high, and the GDP had contracted to 0.3%. However, she also noted that while inflation had ceased its ascent, it was not yet in decline due to persistent high demand.
She further mentioned that major industries experienced a 10% production decrease in 2023, and agricultural output declined by 2.5% in 2022.
Dr. Akhtar attributed these economic challenges to factors such as floods and the conflict in Ukraine. She emphasized that in 2023, around four million people fell into poverty, and unemployment had risen to 10%. Additionally, Pakistan faced pressure for debt repayment.
The caretaker government, she stated, was actively working on restoring the economy through institutional stability and developing an economic recovery program with short and medium-term measures.
“We are striving to make sound economic decisions for the benefit of future governments,” she affirmed, mentioning that the provinces had been instructed to reduce their expenditures.
Dr. Akhtar assured the senators of the caretaker government’s commitment to implementing the IMF program. She also highlighted that the State Bank of Pakistan’s foreign exchange reserves could cover 1.5 months of imports, while the country required $20 billion for the year.
IMF Executive Board’s Approval: $3 Billion Stand-By Arrangement (SBA)
A mere few days before the Shehbaz Sharif-led government dissolved the National Assembly in August, Pakistan initiated a 9-month Stand-By Arrangement (SBA) with the IMF, securing an approximately $3 billion funding.
On June 30, Islamabad formally inked a short-term IMF agreement, entailing a disbursement of $3 billion spread over nine months, contingent on the IMF board’s endorsement.
Following the Executive Board’s endorsement, Pakistan received an immediate disbursement of SDR894 million (equivalent to about US$1.2 billion). The remaining funds are scheduled to be disbursed over the course of the program, subject to two quarterly evaluations.
Pakistan obtained the bailout package after implementing challenging economic measures, including raising interest rates and increasing taxes, to meet the IMF’s conditions.
In an effort to ensure the program’s implementation ahead of the October elections, the IMF team engaged with all major political parties, including Imran Khan-led Pakistan Tehreek-e-Insaf (PTI), to garner support and consensus for the SBA.
