ISLAMABAD: A staff-level agreement has been reached between the International Monetary Fund (IMF) and Pakistan.
According to the IMF, after approval, Pakistan will have access to $1 billion under the Extended Fund Facility and $210 million under the RSF, meaning Pakistan will receive a total of $1.2 billion. The money will be released to Pakistan after approval by the IMF Executive Board and with the new tranche, the amount received by Pakistan will increase to $4.5 billion.
The International Monetary Fund says that the Pakistani economy is improving, inflation and current account are under control, but Middle East tensions pose risks to the economy.
According to the statement, the Pakistani government is determined to reduce the fiscal deficit and in this regard, reforms are underway to improve the tax system. The Benazir Income Support Program has been extended for the poor, and it has been decided to increase assistance to reduce the effects of inflation.
The IMF says that the State Bank will continue its strict policy to control inflation, and the interest rate can be increased further if necessary.
According to the International Monetary Fund, foreign exchange reserves have increased, economic stability has improved, however, fluctuations in energy prices may increase inflation.
The IMF, while urging Pakistan to increase the tax net and control spending, said that the implementation of FBR reforms has started to show positive results, Pakistan is trying to strengthen the digital invoicing and tax audit system, the Tax Policy Office is preparing a medium-term reform strategy, work is underway on better distribution of the fiscal burden between the federation and the provinces, work is underway on a fair distribution of the fiscal burden between the federation and the provinces.
The target is a 1.6 percent primary surplus in the fiscal year 2026, Pakistan plans to increase the surplus to 2 percent in the fiscal year 2027, Pakistan has decided to increase spending on health, education and social security, poverty reduction and social security are among the government’s priorities, while efforts are underway to provide targeted assistance to the class affected by inflation.
The statement said that Pakistan has assured to keep the banking system stable for external payments, while Pakistan has committed to reforms in the energy sector and to stop circular debt.
The International Monetary Fund says that reforms and privatization of government institutions are a key priority for Pakistan. The government of Pakistan has also indicated to reduce government intervention in the market. Pakistan is taking steps against corruption and promoting investment.
Government measures will be accelerated to deal with climate change, while the IMF is also emphasizing green transport and reducing carbon emissions. Preparations are underway to improve the water system and prepare a financial system to deal with disasters. Energy reforms are underway in Pakistan in line with climate goals.
