In a significant development, Pakistan has successfully reached a staff-level agreement with the International Monetary Fund (IMF) for a stand-by arrangement worth $3 billion. The announcement states that the agreement is now pending approval by the IMF Executive Board, which is scheduled to convene in mid-July.
The primary objective of this agreement is to relieve the pressure on Pakistan’s external payments, while also enhancing funding for the social sector. Additionally, the agreement aims to bolster tax revenue in the country. The resulting increase in tax revenue is expected to contribute to public development funding and promote fiscal discipline within Pakistan. Furthermore, the agreement will facilitate energy reforms and permit the market to determine the exchange rate through calculated adjustments.
According to the IMF statement, the standby agreement spans a duration of nine months and enables Pakistan to access financial resources from foreign countries and financial institutions. The IMF emphasizes the importance of implementing stringent policies to address the prevailing economic challenges, particularly in the energy sector.
Program Conclusion and Expectations
It is worth noting that the current program between Pakistan and the IMF is set to conclude today. In a recent statement, Finance Minister Ishaq Dar expressed optimism regarding the imminent finalization of the bailout agreement with the IMF.