$6bn EFF: 6th review to be high on IMF board’s agenda for today’s meeting

ISLAMABAD: The International Monetary Fund’s Executive Board will take the sixth review of the $6 billion Extended Fund Facility (EFF) for Pakistan on the agenda in its meeting scheduled for Wednesday (Feb 2).

The Board calendar shows that its meeting has been scheduled for February 2, 2022, and the agenda 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. Completion of the review would make available SDR 750 million (about $1,059 million), bringing total disbursements under the EFF to about $3,027 million.

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.

Another date: IMF board to now meet on February 2 for Pakistan's sixth 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.

Copyright Business Recorder, 2022