As the State Bank of Pakistan (SBP) is set to consult with the Fund mission on monetary policy and foreign exchange reserves targets for the end of June 2023, Pakistan and the IMF are anticipated to reach a staff-level agreement next week.
Pakistan and the IMF convened a virtual conference
On Thursday night, Pakistan and the IMF convened a virtual conference in which both parties came close to agreement on the macroeconomic and fiscal framework for the current fiscal year.
The economy is suffering from market uncertainty at a time when the administration is trying to reach a staff level agreement as soon as feasible.
“The last two auctions for generating domestic debt have failed to get the desired results mainly because markets are expecting upward adjustments in policy rates,” official sources said.
The SBP will need to raise the discount rate by at least 200 basis points if the IMF’s goal of a positive real interest rate is to be achieved.
Without accounting for the fiscal and energy sector changes the government made in accordance with the IMF’s recommendations, the real GDP growth rate objective was 1.5 to 2 percent, and the CPI-based inflation rate was 29%.
“InshaAllah, we expect that the Staff-Level Agreement (SLA) will be signed next week,” top official sources said while talking to the local news agency on Thursday night.
Aisha Ghaus Pasha, the state minister for finance, previously stated that although the IMF expressed satisfaction with the steps taken by the government to generate an additional Rs. 170 billion in revenue through supplementary finance bill, they were taken aback by the speedy execution of the planned actions.
She added that the IMF was in contact with Pakistan’s friendly nations, such as Saudi Arabia, the UAE, and China, on the nation’s needs for external finance and that it would inform the Executive Board.
According to the minister, the Fund and foreign financing were considered.
“Our talks with friendly countries on external financing are going on and have progressed and we are optimistic that things will move forward.”
Prior to their departure, the IMF delegation and the government established an agreement on the policy level; nevertheless, the government requested clarification on specific phrasing and wording.
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