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A man walks past the International Monetary Fund (IMF) logo. Reuters/File
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On Tuesday, the International Monetary Fund (IMF) announced that it had reached a staff level agreement with Pakistan after completing its latest program review.
The deal, which is subject to approval by the IMF’s Executive Board, includes $ 1 billion under the Extension Fund Facility (EFF) and $ 200 million under flexibility and stability (RSF). Once approved, the total distributions under both arrangements will reach about $ 3.3 billion.
According to the IMF, the debates led by Iowa Petrova were organized to review the progress under Pakistan’s ongoing economic programs in Islamabad between September 24 and October 8-37 months extension under the EFF and 28 months of arrangements under the RSF.
The IMF said in a statement, “With the help of EFF, Pakistan’s economic program is rebuilding economic stability and market confidence. Recovery is on track, in which the financial year 25 current account is recording a surplus – in 14 years,” the IMF said in a statement.
He added that Pakistan’s financial balance has surpassed the target of the program, inflation is there, and external buffers are strengthening between improving the financial situation and reducing independent spread.
However, the fund noted that the recent floods – which have affected nearly seven million people, have caused more than a thousand deaths, and have severe damage to housing, infrastructure and fields – especially on the economic approach in the agriculture sector. He said that this loss has reduced the fiscal year 26 GDP projection between 3.25 and 3.5 %.
The IMF emphasized that this disaster identified Pakistan’s high threat to climate shock and needed pressure to strengthen the elasticity of the climate.
He said that Pakistani authorities confirmed their commitment to maintain understanding economic policies and to advance structural reforms under both programs.
The key priorities of the policy include continuing financial stability, stabilizing poverty reduction measures, improving revenue, maintaining a tough and data -driven monetary policy, restoring the energy sector’s financial health, and advancing climate measures.
The government is committed to the additional year of 1.6 % of GDP’s fiscal year 26 budgets through tax policy and permanent efforts to comply. It is also providing rid of emergency floods through rehabilitation within the federal and provincial budgets.
The IMF mentioned progress in financial reforms, including the establishment of a new tax policy office to simplify the tax code and reduce dependence on ad hoc measures. Cooperation between the federal and provincial governments is being deepened to improve the distribution and financial management of taxes.
Meanwhile, the State Bank of Pakistan is focused on maintaining inflation within 5-7 % in its target range, and the economic conditions need to be adjusted by adjusting its policy position.
In the energy sector, authorities have promised to prevent further accumulation of circular loans while ensuring cost reflection revenue, while privatization and performance in distribution and breeding companies continues to improve.
Reforms are also underway to promote private sector development, improve governance and reduce state intervention in the economy. The projects include measures to enhance trade competitiveness and production capacity as well as reforms in the agriculture sector to ensure food safety.
Under the RSF, Pakistan’s aim is to strengthen flexibility against climate change through green movement measures, improve the risk of destruction, and increase water system management.
The statement added that “the IMF team expresses their sympathy to the victims of the recent floods, and are grateful to Pakistani authorities, the private sector, and development partners for their cooperation and hospitality in this mission.”
