This month, the International Monetary Fund (IMF) mission is scheduled to visit Pakistan to discuss a potential new loan program. The agenda includes deliberations on policies, reforms, and the upcoming federal budget for the new financial year. This visit coincides with the country’s financial authorities gearing up for the formulation of the next fiscal year’s budget.
Sources indicate that the IMF is emphasizing the acceleration of reforms over the size of the program. Pakistan recently concluded a successful $3 billion short-term program, averting default. Now, the government is seeking a new long-term loan program. However, the IMF has yet to specify the date and duration of the upcoming visit.
Pakistan’s economy, valued at $350 billion, has exhibited signs of stabilization since the completion of the recent IMF program. In anticipation of the IMF mission’s visit, the federal government recently decided to halt subsidies for government officials in preparation for negotiations on a new loan package. Notably, subsidies previously provided to Customs officers from grades 17 to 22, including subsidized house rent and medical charges, have been abolished.
Reports indicate that these incentives were funded from the common pool fund. Consequently, the Federal Board of Revenue (FBR) has mandated the cessation of subsidies and incentives from this fund.
On April 30, the State Bank of Pakistan (SBP) received $1.1 billion from the IMF. This disbursement followed the IMF Executive Board’s completion of the second review under the stand-by arrangement during its meeting on April 29, approving the allocation for Pakistan. As a result, SDR 828 million was credited to SBP’s account from the IMF, reflecting in Pakistan’s foreign exchange reserves for the week ending May 3.
