Staff-level agreement with the Fund further delayed despite Pakistan’s accepting all prior actions n Govt ‘assures’ IMF to raise 2pc interest rate.
ISLAMABAD - Pakistan and International Monetary Fund (IMF) have yet to reach a staff level agreement despite Islamabad has taken all tough decisions including increasing power and gas prices massively and imposing new taxation measures worth of Rs170 billion.
Officials of Ministry of Finance were expecting to receive a staff level agreement in the outgoing week after meeting all prior actions of the IMF. However, both sides still have not received on the agreement. An official informed that the government has now given assurance to the Fund to increase the interest rate by two percent in order to control the inflation rate in next few days. Currently, the interest rate is 17 percent.
He further said that there are some issues in power sector on which both sides are negotiating. He was optimistic that Pakistan and IMF would reach a staff level agreement next week, which would pave way for releasing much needed loan tranche for the country. Power sector remained one of the major hurdles between two sides in finalizing the agreement.
It is worth mentioning here that Pakistan and IMF could not reach a staff level agreement as the talks between the two sides ended on February 9 as talks continued for almost ten days. The visiting delegation has sought some time for the staff level agreement and set prior actions and advance measures. The IMF had set prior actions including increasing power and gas prices and announcing mini budget to reach on staff level agreement. The government had already enhanced the power and gas prices.
President Dr Arif Alvi on Thursday has also signed the Finance (Supplementary) Bill, 2023, known as the mini-budget. Pakistan’s foreign reserves held by the country stood at $8.726 billion as of 17-Feb-2023. The break-up of the foreign reserves position is as foreign reserves held by the State Bank of Pakistan are $3.258 billion and net foreign reserves held by commercial bank are $5.468 billion. Pakistan is eyeing to get re-financing of Chinese loans up to $2 billion by the end of February or the first week of March 2023. Two more commercial loans were expected to be re-financing including $500 million and $800 million, making total financing at $2 billion from the friendly country. The revival of IMF programme would pave way for getting loan from other countries and multilateral sources.