Business

Pakistan to finalise IMF deal next month: Miftah Ismail

Published

2 years ago

Farwa

Miftah Ismail says requested IMF to provide $2 billion additional funds.
Country expects around $5 billion from Fund, finance minister says.
Households not registered with BISP can message CNIC on 786, he says.

ISLAMABAD: Finance Minister Miftah Ismail assured Saturday the government would reach the staff-level agreement with the International Monetary Fund (IMF) by next month — June.

Hopes of the IMF programme’s revival rose Thursday after the federal government decided to raise the price of petroleum products by Rs30 as the Fund did not resume the programme due to the subsidies provided on oil and power.

Miftah, addressing a press conference alongside Minister of State for Finance Ayesha Ghous Pasha, said the funds — under the Extended Fund Facility (EFF) — would be released after final approval by the IMF board.

The minister said that Pakistan has requested the Fund — which has to provide $3 billion — to extend the program by one year and provide an additional $2 billion.

If the international money lender agrees to provide Pakistan with the additional amount, the country expects around $5 billion from the Fund, the finance minister said.

He said that the IMF programme was important not just because the country gets money from the Fund, but it plays an important role in opening ways for getting additional funds from other multilateral organisations — like World Bank and Asian Development Bank.

The finance minister said once the Fund releases the latest tranche, Pakistan would get money from multilateral organisations, noting that around $8.9 billion were already in pipeline from World Bank.

Minister defends petrol price hike

The minister justified the increase in petrol prices, saying that no doubt it would increase inflation, but if the hike had not been done, it would lead to sky-rocketing inflation as the burden would fall on the government and resultantly, it would devaluation of rupee further.

He said after increasing the prices of petrol, not only rupee was strengthened against the dollar by around 2.5, but the stock market also moved positively.

The minister said the government intended to provide relief to the poor against the inflationary pressure, which was created due to the “incompetency” of the previous government.

He said the government would try its best to provide maximum relief to the poor of the country.

He added that Saudi Arabia has already announced the extension of its $3 billion deposits to Pakistan and hinted that some more support was expected from that country the details of which would be shared in July.

The relief programme’s details

Giving details about the PM’s relief package, the minister said that the ‘Sasta Petrol and Sasta Diesel’ scheme would benefit around one-third population of the country by providing cash to 14 million households (84 million people).

Disbursement of Rs2,000 to each household would start from June, bringing the total relief amount to Rs28 billion in June. He said around 7.3 million recipients were already registered with Benazir Income Support Program (BISP).

He said the BISP participants would be provided immediate relief or Rs2,000, whereas women heads of those households who are not registered should message their CNIC on 786 for registration for the program.

The finance minister shared that households having an income of less than Rs40,000 would be eligible for the relief. He said the relief scheme would be incorporated into the federal budget for the fiscal year 2022-23.

To a question on privatisation, the minister said there was no talk on privatisation with IMF this time.

However, he added, the country needed to privatise certain entities, including Discos and power companies for its own interest to reduce the burden on the national exchequer.

Business

Pakistan’s $1.1 billion loan tranche is approved by the IMF board.

Published

2 days ago

Farwa

The cash is the third and last installment of a $3 billion standby agreement with the international lender that it obtained to prevent a sovereign default last year and that expires this month.

Following the discussion of Pakistan’s request for the release of funds at today’s IMF Executive Board meeting in Washington, the final tranche was authorized.

Pakistan and the International Monetary Fund (IMF) came to a staff-level agreement last month about the last assessment of a $3 billion loan package.

The total amount of $1.9 billion that the nation has received thus far is divided into two tranches: $1.2 billion in July and $700 million in January 2024.

According to Finance Minister Muhammad Aurangzeb, Islamabad could have a staff-level agreement on the new program by early July. Pakistan is asking the IMF for a fresh, longer-term loan.

In order to support macroeconomic stability and carry out long-overdue and difficult structural changes, Islamabad says it is seeking a loan for a minimum of three years; however, Aurangzeb has reluctant to specify the specific program in question. If approved, it would be Pakistan’s 24th IMF bailout.

See Also: Pakistan formally requests new IMF assistance

The event transpired on the day following Prime Minister Shehbaz Sharif’s meeting with IMF Managing Director Kristalina Georgieva, during which he reaffirmed the government’s resolve to restart Pakistan’s economy.

During the meeting held in conjunction with the World Economic Forum Special Meeting, the prime minister announced that he had given his finance minister, Muhammad Aurangzeb, strict instructions to implement structural reforms, maintain strict fiscal discipline, and pursue prudent policies that would guarantee macroeconomic stability and continuous economic growth.

Georgieva was commended by him for helping Pakistan obtain the $3 billion Standby Arrangement (SBA) from the IMF last year, which was about to be finalized.

Business

Macroeconomic circumstances in Pakistan have improved.

Published

2 days ago

Farwa

By virtue of the Board’s resolution, SDR 828 million, or roughly $1.1 billion, can be disbursed immediately, increasing the total amount disbursed under the arrangement to SDR 2.250 billion, or roughly $3 billion.

After being adopted by the Executive Board on July 12, 2023, Pakistan’s nine-month SBA effectively served as a framework for financial support from both bilateral and multilateral partners, as well as a policy anchor to resolve imbalances both domestically and internationally.

According to the official announcement from the IMF, Pakistan’s macroeconomic conditions have improved during the program. Given the ongoing recovery in the second half of the fiscal year, growth of two percent is anticipated in FY24.

With a primary surplus of 1.8 percent of GDP in the first half of the fiscal year 2024—well ahead of expectations and putting Pakistan on track to meet its target primary surplus of 0.4 percent of GDP by the end of the fiscal year—the country’s fiscal condition is still strengthening.

Even while it is still high, inflation is still falling and should end up at about 20 percent by the end of June if data-driven and adequately tight monetary policy is continued.

In contrast to 11.4 per cent last year, the IMF predicted in an official statement that Pakistan’s tax collection and grants will stay at 12.5% of GDP in FY2024.

After remaining at 7.8% of GDP in FY2023, the deficit is predicted to stay at 7.5% of GDP in FY2024.

Business

Pakistan’s fuel prices should drop.

Published

2 days ago

Farwa

At 0423 GMT, U.S. West Texas Intermediate crude prices fell 13 cents, or 0.16%, to $82.50 a barrel, while Brent crude futures were down 10 cents, or 0.11%, to $88.30 a barrel.

Both benchmarks’ front-month contracts saw losses of over 1% on Monday.

on line with the worldwide trend, the price of gasoline is anticipated to decrease by Rs. 5.4 per liter on the local market. In the same way, buyers in the Pakistani market may see a drop in the price of diesel of Rs8 a litre.

Additionally, it is anticipated that the prices of light fuel and kerosene will decrease by Rs5.40 and Rs8.3 per liter, respectively.

The finance ministry will receive a summary from the Oil and Gas Regulatory Authority (OGRA), and PM Shehbaz Sharif will be consulted before a final decision is made today.

The federal government raised the cost of gasoline by Rs. 4.53 per liter and diesel by Rs. 8.14 per liter at the most recent review.

At the moment, the price of gasoline was Rs 293.94 per liter, while the price of high-speed diesel was Rs 290.38 per liter.