ISLAMABAD : (July 14, 2022). The International Monetary Fund (IMF) confined that it has reached a staff level agreement with Pakistani authorities on policies to complete the combined 7th and 8th reviews of its Extended Fund Facility (EFF).
The agreement, it noted , is subject to approval by the IMF’s Executive Board.
The fund confined its staff level agreement with Pakistan in its statement issued on July 14, 2022.
The statement said
high international prices, and a delayed policy action worsened Pakistan’s fiscal and external positions in FY22, led to significant exchange rate depreciation, and eroded foreign reserves.
The immediate priority is to stabilize the economy through the steadfast implementation of the recently approved budget for FY23, continued adherence to a market-determined exchange rate, and a proactive and prudent monetary policy. It is important to expand social safety to protect the most vulnerable, and accelerate structural reforms including to improve the performance of state-owned enterprises (SOEs) and governance.
It added reducing poverty and strengthen social safety. During FY22, the unconditional cash transfer (UCT) Kafalat scheme reached nearly 8 million households, with a permanent increase in the stipend to PRs 14,000 per family, while a one-off cash transfer of PRs 2,000 (Sasta Fuel Sasta Diesel, SFSD) was granted to about 8.6 million families to alleviate the impact of rampant inflation. For FY23, the authorities have allocated PRs 364 billion to BISP (up from PRs 250 in FY22) to be able to bring 9 million families into the BISP safety net, and further extend the SFSD scheme to additional non-BISP, lower-middle class beneficiaries.
Strengthen governance. To improve governance and mitigate corruption, the authorities are establishing a robust electronic asset declaration system and plan to undertake a comprehensive review of the anti-corruption institutions (including the National Accountability Bureau) to enhance their effectiveness in investigating and prosecuting corruption cases.
“Steadfast implementation of the outlined policies, underpinning the SLA for the combined seventh and eighth reviews, will help create the conditions for sustainable and more inclusive growth. The authorities should nonetheless stand ready to take any additional measures necessary to meet program objectives, given the elevated uncertainty in the global economy and financial markets.
The agreement and its endorsememt by the Fund’s executive board will make it possible for formal resumption of $ 7 billion EFF for Pakistan and release of $ 1.17 billion dollar
“The IMF team thanks the Pakistani authorities, private sector, and development partners for fruitful discussions and cooperation during the discussions”, the statement concluded.
Prime minister , Shahbaz Sharif , congratulated Finance minister , Miftah Ismail, and Foreign minister , Bilawal Bhutto, for making a staff level agreement with IMF .