The International Monetary Fund (IMF) has approved 6th tranche of Extended Fund Facility programme for Pakistan, Finance Minister Shaukat Tarin said Wednesday.
“I am pleased to announce that IMF Board has approved 6th tranche of their programme for Pakistan,” the Federal Minister for Finance and Revenue tweeted.
The IMF mission led by Ernesto Ramirez Rigo had held virtual discussions during October 4-November 18, 2021 in the context of the 2021 Article IV consultations and the sixth review of the authorities’ reform program supported by the IMF’s Extended Fund Facility (EFF).
The Pakistani authorities and IMF staff had reached a staff-level agreement on policies and reforms needed to complete the sixth review under the EFF, however the agreement was subject to approval by the Executive Board, following the implementation of prior actions, notably on fiscal and institutional reforms.
Now, after the approval, the fund would provide available SDR 750 million (about US$1,059 million) loan to Pakistan, bringing the total disbursements under the EFF to about US$3,027 million
An additional SDR 1,015.5 million (about US$1,386 million) was disbursed in April 2020 to help Pakistan address the economic impact of the COVID-19 shock. It is pertinent to mention here that the fund had approved $6 billion, three-year loan facility for Pakistan back in July 2019 to help resuscitate the country’s ailing economy.
The IMF’s Executive Board held a meeting in Washington DC on Wednesday to consider Pakistan’s request for completion of the sixth review and release of a $1 billion tranche under the Extended Fund Facility (EFF).
The prior actions for the IMF board meeting that Pakistan met were approval of Rs360 billion mini-budget by the National Assembly, increase in the petroleum development levy rates every month (except in February), approval of the SBP Amendment Bill and the audit of Covid-19 expenditures and sharing of details about the beneficial ownership of coronavirus vaccines.
Earlier, the government had decided to keep the Covid-19 expenditures audit report confidential in violation of the IMF agreement. The report has disclosed Rs40 billion irregularities in the PM’s Covid relief package.
In November last year, Tarin had admitted that as a result of the IMF’s condition, “difficulties of the lower income groups will increase marginally but targeted subsidies will be given”. The inflation rate in January skyrocketed to 13% -the highest in two years.
To qualify for the tranche, the Public Sector Development Programme was cut by Rs200 billion or 22% and the “contingency grants” were reduced by Rs50 billion, Tarin had said in November.
The tax collection target of the Federal Board of Revenue (FBR) has been increased to over Rs6.1 trillion – an addition of roughly Rs350 billion The revised petroleum development levy target is now Rs356 billion – down from Rs610 billion that the government had set in the budget.
Keeping in view the requests from Pakistan, the IMF had postponed its Executive Board meetings thrice this month. The IMF board meeting was postponed last time from January 28 to February 2, 2022. The loan programme had been stalled since April 2021.
Meanwhile, the next review (seventh) under the $6 billion EFF programme will be due in April 2022. The last and final eighth review is expected to be done in September 2022.
Minister for Information and Broadcasting Chaudhry Fawad Hussain also said the Executive Board of International Monetary Fund (IMF) had decided to release $1 billion tranche to Pakistan after completing sixth review of the country. “Alhamdulillah, the IMF board has completed sixth review board of Pakistan and decided to release $1billion tranche to Pakistan,” the minister tweeted. He said the decision would not only help stabilise the economy, but also ensure completion of reforms process.
