Govt expects to sign staff level agreement with IMF next week

ISLAMABAD: Finance Minister Ishaq Dar on Thursday claimed that the government is expecting to sign a staff level agreement with the International Monetary Fund (IMF) next week.

“Our negotiations with the IMF are about to conclude and we expect to sign a Staff Level Agreement with the IMF by next week,” Dar said, adding that all economic indicators are slowly moving in the right direction while foreign commercial banks have started extending  facilities to Pakistan.  

He further said that SBP forex reserves have been increasing and are almost up by $1 billion as compared to four weeks ago despite making all the due payments on time.

He said that anti-Pakistan elements are spreading malicious rumors that Pakistan may default. “This is not only completely false but also factually incorrect,” Dar added.

It is pertinent to note that the government’s economic team and the IMF have been negotiating to finalise the deal for a month now.

Later in the day, the State Bank of Pakistan (SBP) raised the benchmark interest rate by a significant 300 basis points (bps) to 20%, which was one of IMF’s main conditions.

On the other hand, the ECC on Wednesday also approved the imposition of a Rs 3.82/unit additional surcharge for four months i.e. Mar-23 to June-23. Earlier, the government had withdrawn the subsidy for the export oriented sector as well as agriculture consumers to comply with another demand by the Fund.

The government had also approved a mini budget worth Rs 170 billion in new taxes in mid-February. The finance minister had said that the government will use this amount to curtail the mounting circular debt.

Moreover, the government has also cut ministries or divisions expenditures by 15% besides imposing a complete ban on the purchase of all new durables as well as vehicles from June 1, 2023.

Sources said that the IMF delegation does not trust the current government’s economic team due to which they have asked for the implement of the agreed points prior to the disbursement of the loan.

Sources also informed Profit that IMF’s team during their visit to Islamabad had held a meeting with ambassadors of friendly countries for confirmation of whether they were ready to give funds to Pakistan for shoring up its foreign reserves.

It may be noted that according to the State Bank of Pakistan (SBP) on Tuesday, foreign exchange reserves increased by $556 million to $3,814.1 million after a $700 million loan from the Chinese Development Bank.