Stay the course on reforms, IMF urges Pakistan

Jihad Azour, Director Middle East and Central Asia Department (MCD) at the International Monetary Fund (IMF), has emphasised the importance of “staying the course” on reforms as Pakistan remains enrolled in a 37-month, $7-billion Extended Fund Facility with the Washington-based lender.

The remarks came during Azour’s meeting with the Pakistani delegation, which included Finance Secretary Imdad Ullah Bosal and Governor State Bank of Pakistan (SBP) Jameel Ahmad among others.

As per a statement released by the Finance Division during the early hours of Tuesday, Jihad Azour congratulated Pakistan on the successful start of the Fund’s latest programme, while emphasising the importance of staying the course on reforms.

“The IMF Director stressed the need for continuation of reforms in Pakistan, and continued support to the IMF’s Extended Fund Facility (EFF) for Pakistan,” read the statement.

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Meanwhile, the Pakistani delegation thanked the IMF for providing support to Pakistan’s economic stability, especially for the recently approved $7 billion EFF.

It is the 25th IMF programme that Pakistan has obtained.

“The delegation outlined the government’s efforts towards fiscal consolidation, revenue expansion, energy and state-owned enterprises (SOE) reforms, aimed at transitioning Pakistan from stabilization to growth,” read the statement.

Last month, the country received the first loan tranche of nearly $1.1 billion following the IMF Executive Board approval.

Back then, the Executive Directors of the IMF had said Pakistan needs to “move away” from its state-led growth model and strengthen the business environment.

In addition to the IMF, global credit-rating agencies including Fitch, Moody’s, and S&P have also urged Pakistan to persist with its reform agenda to secure long-term economic stability.

“Pakistan’s large funding needs leave it vulnerable if it fails to implement challenging reforms, which could undermine programme performance and funding,” Fitch had warned as it upgraded Pakistan’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘CCC+’ from ‘CCC’ in July.

Meanwhile, the IMF current programme also includes 22 structural benchmarks (SBs) and conditionalities, including not granting tax amnesties, not issuing any new preferential tax treatment (including exemptions, zero rating, tax credits, accelerated depreciation allowances, or special rates), as well as average premium between the interbank and open market rate to be no more than 1.25% during any consecutive 5 business days.