ISLAMABAD: Pakistan has successfully completed its recent reviews under the International Monetary Fund (IMF)’s Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF), after which it is likely to receive about $1 billion and an additional $210 million, subject to final approval by the IMF board.
The IMF had announced on March 27 that a staff-level agreement had been reached with Pakistan, under which the third EFF review and the second RSF review were completed. Since then, discussions have been ongoing between the government and the IMF on fuel prices, subsidy elimination and petroleum levy targets.
The government had set a petroleum levy target of Rs1.47 trillion for the current fiscal year, while its collection has exceeded Rs1.2 trillion in the first nine months alone. Although officials claim to continue the subsidy on diesel, the IMF is advising a phased withdrawal of this subsidy.
According to sources, the government is considering increasing the levy on petrol or re-imposing tax on diesel to meet potential shortfalls in the Federal Board of Revenue. These measures may be included in the budget for the next fiscal year.
The Finance Minister said in a recent statement that Pakistan wants flexibility in the IMF program while maintaining fiscal discipline to deal with the impact of global economic conditions and regional tensions.
According to the IMF, Pakistan’s program is overall moving in the right direction, which includes fiscal consolidation, inflation control, energy sector reforms and social protection measures. Progress is also being made on climate reforms under the RSF, which aims to strengthen the economy against climate risks.
According to the report, economic activity improved at the beginning of the current fiscal year, while inflation and the current account deficit remained under control. However, ongoing tensions in the Middle East and fluctuations in energy prices could pose challenges for the future.
According to IMF Mission Chief Eva Petrova, after the board’s approval, Pakistan will have a total amount of up to $4.5 billion available, which could lead to economic stability and increased investor confidence.
According to officials, Pakistan has expressed its determination to reduce the fiscal deficit, increase the tax net and bring discipline to expenditure in the coming fiscal years, so that the economy can be built on a sustainable basis.
