Prime Minister Shehbaz Sharif announced that his government is diligently working to meet the conditions set by the International Monetary Fund (IMF) to finalize the $7 billion loan program, which he hopes will be the last one the country will need.
In July, Pakistan and the IMF reached a 37-month loan agreement, contingent on approval from the IMF’s executive board and the securing of necessary financial assurances from Pakistan’s development and bilateral partners.
“We are focused on implementing all the conditions required for the IMF program,” the prime minister stated, according to Reuters on Tuesday. He expressed optimism that the IMF board’s approval would mark the beginning of a new chapter for Pakistan.
Moody’s recently upgraded Pakistan’s credit rating to Caa2, citing greater certainty regarding external financing following the IMF staff-level agreement. Moody’s anticipates the IMF board’s approval of the loan program in the coming weeks.
However, concerns have emerged as Pakistan’s loan approval is not currently listed on the IMF Executive Board’s latest meeting agenda. This loan is critical for stabilizing Pakistan’s troubled economy.
Despite this, the government remains hopeful that the IMF will approve the $7 billion bailout package by next month.
In a televised address, Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb, confirmed that Pakistan had already signed a Staff Level Agreement (SLA) with the IMF and was close to securing the board’s approval.
While echoing the Prime Minister’s hope that this will be the last IMF program, Aurangzeb emphasized that it would depend on the successful implementation of structural reforms and the country achieving self-sufficiency.
The finance minister reiterated the government’s commitment to advancing its reform agenda, which includes broadening the tax base and streamlining the federal government to achieve macroeconomic stability, which he described as “basic hygiene” necessary for sustainable growth.
He also pledged to move forward with plans for new taxes on the retail sector, despite the threat of strikes, as part of efforts to secure IMF board approval.
The new taxes, introduced in the June budget to meet ambitious revenue targets aligned with the IMF program, have faced public backlash.
“I want to make it very clear… this is not going to be rolled back,” Aurangzeb stated in his televised speech, urging wholesalers, distributors, and retailers to contribute to the economy.
His comments follow a nationwide strike by retailers last week, protesting against the new tax scheme and high electricity rates. Despite the chairman of the All-City Tajir Ittehad Association, Muhammad Sharjeel Goplani, threatening an indefinite strike if demands were not met, no further actions have been announced.
The IMF’s board approval is contingent on confirmation of financing assurances for Pakistan from development and bilateral partners.
Local media reported that the approval was delayed due to insufficient additional financing and unpaid energy sector subsidies announced by Punjab province and the federal government.
Punjab’s Information Minister, Azma Bukhari, stated that neither the federal government nor the IMF had contacted the province about an electricity subsidy, and the IMF had not issued any written statements regarding the matter.
Requests for comment from the IMF, the finance ministry, and the power ministry went unanswered.
Addressing unresolved debt in Pakistan’s power sector remains a top priority for the IMF, which ended a $3 billion bailout in April. This led to higher tariffs, impacting the poor and middle class, and resulted in a decrease in household energy consumption for the first time in 16 years.
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