The SBP has also remained proactive in adjusting the policy rate to shore up confidence and anchor inflation expectations. "We have stepped up our efforts to increase revenue, which are already paying off, with a significant growth in tax collection (by 17.2 percent in Q1 FY 2020)," stated the authorities.
"Further, our strategy to reduce the flow of arrears in the power sector is already bearing fruit, with accumulation of new arrears falling from about PRs 38 billion/month in FY 2019 to around PRs 10 billion/month in FY 2020.
"Our actions ensured that all end-September 2019 and continuous performance criteria (PCs) were observed, including the floor on net international reserves (NIR), the ceiling on net domestic assets (NDA), and the primary balance by wide margins.
"We have made significant progress to strengthen the effectiveness of our AML/CFT framework, developed an inter-agency roadmap to address identified deficiencies, and engaged capacity development providers," said the LoI.
Regarding the end-October SB on the adoption of measures to strengthen the effectiveness of the AML/CFT framework, we have intensified our efforts to advance this crucial reform, including through IMF-provided technical assistance, and request to reset this benchmark to end-June 2020 with substantial milestones to be achieved by end-March 2020.
"Going forward, our efforts remain focused on securing macroeconomic stability and setting the stage for sustainable and balanced growth, critical for the Pakistani people." This includes actions to (i) increase tax revenues and preserve fiscal discipline, including by the provinces, to create space for much-needed social spending and infrastructure investment; (ii) strengthen the operations and independence of the SBP; (iii) address AML/CFT weaknesses; (iv) eliminate the flow and stock of arrears in the power sector; and (v) improve governance and the business climate through farreaching structural reforms.
The program will continue to be monitored through quarterly reviews, prior actions, quantitative performance criteria, indicative targets, and structural benchmarks as described in the attached MEFP and Technical Memorandum of Understanding (TMU).
The report said, "We believe that the policies set forth in the attached MEFP are adequate for the successful implementation of our program, but we will take any additional measures that may be appropriate for this purpose.
We will consult with the IMF on the adoption of these measures, and in advance of revisions to the policies contained in the MEFP, in accordance with the IMF's policies on such consultation. We will supply the Fund with timely and accurate data that are needed for program monitoring. Reaffirming our commitment to our policy of transparency, we consent to the IMF's publication of this letter, the MEFP, the TMU, and the accompanying Executive Board documents."