IMF agreement to be inked next week: Rana Sanaullah
- “Govt has fulfilled all requirements of IMF,” the interior minister says.
- He adds after agreement relief could be passed on to the public.
- Pakistan and IMF are engaged in tough talks since late January.
ISLAMABAD: With all eyes on the International Monetary Fund (IMF) for their final nod, Interior Minister Rana Sanaullah has said the agreement with the lender would be inked formally during next week, Radio Pakistan reported on Tuesday.
The two sides are engaged in tough talks to reach a consensus on multiple conditions since late January before signing the deal which also includes external financing from friendly countries.
Sanaullah, addressing a public gathering in Faisalabad, said that the government has fulfilled its all requirements and after the agreement relief could be passed on to the public.
A day earlier, Finance Minister Ishaq Dar told Geo News that Pakistan has “fulfilled all the conditions” of the IMF and hoped that the Fund will soon sign the staff-level agreement, paving the way for the release of the $1.1 billion tranche.
Dar said both Saudi Arabia and the United Arab Emirates (UAE) have informed the IMF about their commitments to provide $3 billion to Pakistan.
Riyadh will provide $2 billion while Abu Dhabi has promised $1 billion to Pakistan, Dar said, adding that the Washington-based lender has also been informed in this regard.
The finance minister said all the conditions for the staff-level agreement between Pakistan and IMF have been fulfilled.
“Pakistan is hopeful that IMF will soon sign the SLA and get it approved by its Executive Board,” Dar added.
The country’s foreign exchange reserves have fallen to cover barely a month of imports after the IMF funding stalled in November, hit by snags over fiscal policy adjustments after officials of the lender visited Islamabad in February for talks.
They formed part of a ninth review exercise on a bailout package of $6.5 billion agreed upon in 2019 whose resumption is critical for Pakistan to avoid risking default on external payment obligations.
Pakistan had to complete actions demanded by the IMF, such as reversing subsidies in its power, export and farming sectors, hikes in the prices of energy and fuel, and a permanent power surcharge, among other measures.
These steps included jacking up its key policy rate to an all-time high of 21%, a market-based exchange rate, arranging for external financing, and raising more than Rs170 billion ($613 million) in new taxes.
The fiscal adjustments have already fuelled Pakistan’s highest inflation ever, which climbed in March to more than 35% on the year.
The IMF programme will disburse another tranche of $1.4 billion to Pakistan before it concludes in June.
Funds from the lender will also unlock other bilateral and multilateral financings for the cash-strapped country.
Neighbouring China has rolled over $2 billion and refinanced another $1.3 billion in recent weeks.
APCC to meet today to decide budget outlay, targets
- APCC will meet at the Ministry of Planning today.
- Govt considering allocation for Diamer Basha Dam in budget.
- Total PSDP size would be proposed at Rs1,000bn.
ISLAMABAD: The Annual Plan Coordination Committee (APCC) is likely to recommend around Rs900-1,000 billion macroeconomic framework and size of the federal development outlay for the upcoming budget for the next fiscal year 2023-24, The News reported Friday.
In the federal budget, against the revised estimates of Rs111 billion in the outgoing financial year, the government is all set to recommend a Rs90 billion proposed allocation for the controversial Sustainable Development Goals Achievement Programme (SAP) for parliamentarians.
Now the arrangements are underway for further jacking up the allocation of the SDG Achievement Programme from Rs111 billion to Rs116 billion for the outgoing fiscal year.
Well-placed sources in the Cabinet Division told The News that parliamentarians belonging to Balochistan and Sindh provinces largely presented flood-related schemes under the SDG Achievement Programme in the current fiscal year.
The World Bank and Asian Development Bank (ADB) were also providing $3 billion in loans for flood-related schemes in the aftermath of the severe floods, so at least there should be some kind of mechanism to avoid overlapping at the cost of the national exchequer.
There were 50 to 60% of small development schemes in Sindh and Balochistan related to floods in the outgoing financial year.
There are reports that one political party, which is one of the major allies of the ruling coalition at the federal level, placed a condition that all funds on behalf of their parliamentarians should be handed over to the political leader, who would disburse their share to each parliamentarian belonging to the party.
All major allies of the Pakistan Democratic Movement-led government are beneficiaries of this SAP programme, as its funding has gone up from Rs68 billion at the initial level to Rs116 billion in the ongoing financial year.
The APCC, which is scheduled to meet in the Ministry of Planning today (Friday), will consider approval of the macroeconomic framework, including a real GDP growth rate of 3.5% and CPI-based inflation at 21% for the upcoming budget 2023-24.
According to the working paper prepared by the Ministry of Planning on Thursday, the Ministry of Finance gave an indicative budget ceiling for the Public Sector Development Programme (PSDP) to the tune of Rs700 billion for the next budget for 2023-24 but the Minister for Planning hoped that it would be jacked up to Rs800 billion under the directives of Prime Minister Shehbaz Sharif.
Now that the government has proposed an allocation of Rs200 billion for the Viability Gap Fund (VGF) executed through public-private partnerships (PPP), the total PSDP size would be proposed at Rs1,000 billion at the federal level for the next financial year.
The share of the National Highway Authority (NHA) in the proposed PSDP would be reduced, ranging from Rs90 billion to Rs100 billion for the next budget, mainly because the NHA remained unable to utilise the major chunk of the total allocated amount in the ongoing financial year.
The government is all set to propose allocations for flood mitigation and reconstruction efforts in the coming financial year. The government is also considering making an allocation for the Diamer Basha Dam in the coming budget for 2023-24.
Is Pakistan launching digital currency?
KARACHI: After making impressive progress in digital banking, the State Bank of Pakistan (SBP) is planning to launch a digital currency in the future, The News reported Friday.
Central Bank’s Digital Financial Services Group Additional Director Shoukat Bizinjo said that a large number of central banks around the world, including Pakistan’s, are studying CBBCs (callable bull/bear contracts) in order to launch digital currency in their respective countries.
Bizinjo — while speaking at the 16th international conference on Mobile Commerce 2023 — said: “Pakistan’s central bank is reviewing and consulting with other central banks in this regard (CBBCs and digital currency).”
They are leveraged investments that track the performance of the underlying assets without requiring investors to pay the full price required to own the actual assets. Bizinjo said that the SBP is also in consultation with local industrial players to introduce digital currency.
He said that Electronic Money Institutions (EMIs) have made remarkable progress in e-banking through the launch of e-money wallets for consumers and merchants, and other digital payment instruments such as prepaid cards and contactless payment instruments.
Currently, the country has four live commercial EMIs, including NayaPak, Finja, CMPECC, and Sada Tech Pakistan. EMIs have an outstanding e-money balance of Rs2 billion, managing 1.6 million e-money wallets and 2.4 million payment cards as of March 31, 2023.
There are around 12 EMIs at different stages of acquiring licenses from the central bank. There are also dozens of companies that are in constant talks with the SBP to become EMIs.
Pakistan rules out Plan B rumours in case of IMF programme failure
- Budgetary framework has been shared with IMF, says minister.
- Dr Pasha says IMF did not accept external financing gap of $4.5bn.
- Adds there is a trust deficit because of PTI govt.
ISLAMABAD: Minister of State for Finance Dr Aisha Ghaus Pasha has ruled out any possibility of contemplating upon any other option — Plan B — in case Pakistan fails to woo the International Monetary Fund (IMF) to revive the stalled loan programme, The News reported Friday.
“Let me say with clarity there were no other options that we are contemplating upon under Plan B in case of no revival of the Fund programme as the government was committed to reviving the IMF programme by completing the pending ninth review,” she said.
During a briefing of the National Assembly Standing Committee on Finance at the Federal Board of Revenue (FBR) headquarters, MNA Ali Pervez Malik questioned Dr Pasha about Plan B in case of failure to revive the IMF programme and said that there was talk about a dollar amnesty scheme to improve dollar liquidity.
The minister further revealed that the Fund did not accept the external financing gap of $4.5 billion assessed by Pakistan.
Dr Pasha disclosed that the IMF was still sticking to its projection of a financing gap of $6 billion for the ongoing financial year against Islamabad’s assessment of $4.5 billion on which assurances extended to the IMF by multilateral as well as bilateral creditors.
She went on to say that the government has shared the budgetary framework for the next fiscal year to satisfy the IMF. However, Pakistan has been waiting for the IMF’s response to share its recent steps to bridge the gap between interbank and open market rates on exchange rates, and assurances on external financing gaps.
It should be noted that a broader agreement on these three major conditions could only pave the way for striking a staff-level agreement.
The minister clarified that the sharing of budgetary numbers is not the part of ninth review as it will be part of the 10th review but Prime Minister Shehbaz Sharif has decided to share the numbers for the revival of the Fund programme.
A senior official of the State Bank of Pakistan informed the NA panel that the permission granted for credit cards from exchange companies to interbank rate would require $70 million to $100 million on average on a monthly basis and recommended the FBR for raising taxes on transactions through credit cards in foreign exchange in the upcoming budget to compress demands for increased foreign exchange requirements.
Dr Pasha said that there was a trust deficit, not because of the incumbent regime, but blamed the last PTI-led government for breaching the IMF agreement by doling out un-targeted fuel and electricity subsidies just before leaving the government in the last financial year.
She said that Saudi Arabia had granted assurances of $2 billion in additional deposits, while $1 billion have been committed by the United Arab Emirates (UAE).
The World Bank committed $450 million through the RISE-II programme loan and $250 million through Asian Infrastructure Investment Bank (AIIB).
The remaining are expected through Geneva pledges in the aftermath of flood assistance.
Pakistan, she said, secured financing assurances of $4.5 billion. Initially, it was planned that out of $6 billion, the government would get assurances on $3 billion before signing the staff-level agreement. She said that the government paid back $3 billion to commercial banks with the understanding that it would get re-financed these loans once the SLA is done.
“We also expect that after the revival of the IMF programme, other avenues of securing dollars will also open up” she added.
The ongoing IMF programme is going to expire on June 30 therefore the time is limited for completion of the pending 9th review under the $6.5 billion Extended Fund Facility (EFF).
If the staff-level agreement is reached by evolving a broader consensus on three contentious issues including external financing, budgetary framework, and sticking to the free market exchange rate then the programme will be revived otherwise the programme will be met with failure.
However, the sources said that Pakistan would be left with no other option but to seek another IMF programme next fiscal year keeping in view debt external repayments of $25 billion.
It does not include the current account deficit and if it is projected in the range of $7-8 billion for the next fiscal year then the total external financing requirements will be stretched up to $32-33 billion in 2023-24.
KU students end protest after ‘picked up’ student returns
Ex-Punjab CM Usman Buzdar becomes latest PTI leader to quit politics
Jibran Nasir’s ‘kidnapping’ case registered hours after he was ‘picked up’ in Karachi’s DHA
Barwaan Khiladi: Kinza Hashmi discusses her role as Alia
Snap launches tools for parents to monitor teens’ contacts
WATCH: Pakistani traveller deported from Dubai for damaging plane mid-air
Learn First | How to Create Amazon Seller Account in Pakistan – Step by Step
Sajjad Jani Funny Mushaira | Funny Poetry On Cars🚗 | Funny Videos | Sajjad Jani Official Team
Pakistan Reaction On Huge Win Against India | Pakistani Celebs Celebrate World T20 Cricket
Politics3 days ago
Imran Khan rubbishes reports of ‘losing contact’ with President Arif Alvi
Politics3 days ago
FM Bilawal leaves for Jordan to attend ‘royal wedding’
Pakistan2 days ago
6 killed, 2 injured in explosion in Kot Addu
Politics3 days ago
PTI deserters meet Shah Mahmood Qureshi in Adiala jail in bid to ‘convince’ him to quit party
Business3 days ago
Gold prices rise in Pakistan after two-day decline
Pakistan3 days ago
What is the deadline to apply for PM Shehbaz’s laptop scheme?
Tech19 hours ago
US AI drone kills interfering operator in simulation; airforce denies incident
Tech3 days ago
WhatsApp brings two amazing updates for users