IMF mission holds crucial talks with FinMin Aurangzeb on $3 billion SBA

In a pivotal meeting held on Thursday, Pakistan’s Finance Minister, Muhammad Aurangzeb, engaged in discussions regarding structural reforms and the viability of the energy sector with the visiting International Monetary Fund (IMF) mission.

The mission’s visit is part of the second review process of the $3 billion Stand-By Arrangement (SBA) established between Pakistan and the international lender.

Key points of deliberation encompassed various facets of Pakistan’s macroeconomic landscape, including fiscal consolidation efforts by the government, structural reforms, energy sector sustainability, and governance of state-owned enterprises (SOEs).

Expressing a warm reception, the finance minister underscored the government’s steadfast commitment to collaborating with the IMF to drive forward the reform agenda, aimed at fostering economic growth and bolstering stability across Pakistan.

During the meeting, Nathan Porter, head of the IMF mission, extended congratulations to Muhammad Aurangzeb on his appointment as the finance minister.

Anticipations are high that the IMF mission’s visit could culminate in a staff-level agreement regarding the second review of the SBA.

Since its inception in July 2023, Pakistan has received $1.9 billion out of the allocated $3 billion under the nine-month programme.

Aurangzeb, articulating the government’s stance, outlined intentions to explore the possibility of acquiring a more extensive and prolonged Extended Fund Facility (EFF) within the IMF framework, with the overarching objective of attaining macroeconomic stability.

Officials from Pakistan, including Finance Minister Muhammad Aurangzeb and Energy Minister Musadik Malik, apprised the IMF team of the concerted efforts undertaken to implement the prescribed reforms, including the adjustment of energy tariffs.

An official from the Finance Division, speaking on anonymity, disclosed the IMF’s acknowledgment of Pakistan’s strides in meeting quarterly programmeme targets under the SBA.

Simultaneously, discussions are underway to chart the trajectory of the subsequent programmeme, with deliberations leaning towards a more extensive endeavour valued at approximately $8 billion.

Minister Malik elaborated on the government’s energy reform agenda, highlighting recent adjustments in electricity and gas prices aligned with the stipulated schedule.

The recent levy hike on petrol and diesel, coupled with the augmentation of gas tariffs for domestic consumers, underscores Pakistan’s commitment to fulfilling key conditions outlined in the IMF’s final review.

Economic analysts anticipate a seamless final review process, citing Pakistan’s commendable adherence to the IMF’s performance targets as a harbinger of success.

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