ISLAMABAD: The executive board of the International Monetary Fund is set to approve $1 billion tranche for Pakistan today as the government has fulfilled all the upfront measures attached to resumption of IMF assistance to Pakistan.
The most tough conditions of the IMF included the approval of mini-budget and SBP amendment bill 2021 from the parliament and monthly increase of Rs 4/liter in petroleum levy till the time the levy hits Rs30/liter and withdrawal of more than 350 billion worth subsidies.
The executive board of the IMF is holding its meeting today to conduct sixth review of the $6 billion Extended Fund Facility (EFF) for Pakistan.
The agenda of the IMF board includes Pakistan – 2021 Article IV Consultation, sixth review under the Extended Arrangement, under the Extended Fund Facility, and Requests for Waivers of Nonobservance of Performance Criteria and Rephasing of Access.
With the successful Completion of the review would lead to immediate disbursement of 750 million Special Drawing Rights (SDRs) known as IMF currency (equal to $1.059 nillion). The fresh disbursement would raise the total disbursements under the EFF to about $3,027 million.
A couple of months ago, Pakistan and the IMF had reached a staff-level agreement on policies and reforms needed to complete the sixth review under the $6 billion Extended Fund Facility (EFF) and issued a press statement on November 21, 2021. The staff-level agreement is subject to approval by the Executive Board, following the implementation of prior actions, mainly on fiscal and institutional reforms.
The Board meeting was earlier scheduled for January 12, 2022, however, the IMF later removed Pakistan’s agenda from the Executive Board calendar after the Ministry of Finance formally requested the global lender to postpone the approval of the review till end January 2022. The postponement was requested over the delayed approval of the State Bank (Amendment) Bill 2021, as a prior conditions for the review.
Finance Division on January 10, 2022 issued a statement saying that it has officially requested the IMF to reschedule the meeting of the Board of Director for the approval of 6th review till end January. The Executive Board was again rescheduled for January 28, 2022, but later it was again rescheduled for February 2, 2022.
The government has passed the two critical bills including the Finance (supplementary) Bill and the State Bank of Pakistan (SBP) Amendment Bill, 2021 from the parliament, as the prior conditions needed for the sixth review of the $6 billion EFF to get cleared by the IMF’s executive board.
The government had committed to the IMF that Pakistan will complete all “prior actions” before the board of directors meeting to approve the revival of $6bn EFF. Under those prior actions, the government, through the supplementary finance bill, will make fiscal adjustment during the remaining part of the current fiscal year through a 22 per cent cut in development funds, about Rs343 billion worth of withdrawal of tax exemptions with a revised tax target of Rs6.1 trillion and increase in petroleum levy on major petroleum products by Rs4 per litre per month. The government has already increased electricity prices.
