IMF ‘appreciates’ progress, but still stringent on conditions

ISLAMABAD: The International Monetary Fund (IMF) has asked the government to achieve the revenue target, keep a lid on issuing new guarantees and put into effective implementation the circular debt reduction strategy, reported Dawn.

“The talks with the visiting mission have been highly successful and the government did not ask for a waiver, it was not required,” said a source quoted in the report.

The IMF mission appreciated progress on the implementation of the programme so far but emphasised that there was no room for complacency in any of the key areas going forward.

The IMF has also called for a strict adherence to Rs1.6 trillion worth of government guarantee limit and discussed various options with the ministries of finance and power regarding tariff issues, claimed the media report.

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The government is expecting disbursement of the second tranche of about $453 million in December this year as a result of completion of the first quarterly review. Pakistan had already received about $995 million in July out of total $6 billion programme on completion of all prior actions committed by the country before signing the fund programme.

The government was advised to strengthen coordination at the federal and provincial levels for greater fiscal and economic calibration and taxation harmonisation.

Under the fund programme, the government is required to deliver on six performance criteria including those relating to net international reserves, net assets of the central bank, SBP’s stock of net foreign currency swaps and forward position, primary budget deficit, no government borrowing from central bank and a ban on government guarantees.

In addition, there are two continuous performance criteria including zero new credit to the government by SBP and on accumulation of external public payment arrears. On top of that, the authorities’ performance is also reviewed on five indicative targets including disbursements under Benazir Income Support Programme, government spending on health and education, tax collections, payment of tax refunds and a freeze on power sector’s circular debt.

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