IMF team will travel to Pakistan next month for first review under SBA  

ISLAMABAD: The International Monetary Fund (IMF) team will visit Islamabad in the first week of November to review the country’s economic performance under the Stand-By Arrangement (SBA).

Talking to Profit, sources within the finance division said that the economic team is working diligently to meet all commitments made with the IMF in July. This includes structural benchmarks, quantitative criteria and indicative targets 

Meanwhile, the ministry of Finance has also written a letter to all the ministries and divisions, asking them for the status of compliance with all the pledges made with the Fund.

Under the SBA, Pakistan committed with the IMF that the government will not grant further tax amnesties other than the issuance of new preferential tax treatments or exemptions.

In addition, the IMF also stipulated a condition on the parity between the open market and interbank exchange rate to be no more than 1.25% during any consecutive 5-business-day period.

Over the course of the last few years, the interbank and open market rates of the dollar have regularly had a gap between them. This largely happens because of a government’s attempt to manage the value of the rupee.

Sources said that the government is also working on a multi-year subsidy rationalisation plan under the residential subsidy reform in 2022, that focuses on tube-wells for large agricultural users.

The government under the SBA will also have to improve the governance of State-Owned Enterprises (SOEs). This will be done by bringing into effect the recently approved SOE law and enacting it as a policy, to clarify the ownership arrangements and the division of roles within the federal governments. The state is also expected to amend the acts of four selected SOEs, to make the new SOE law fully applicable to those SOEs.

Sources said that the Auditor General of Pakistan is also conducting special audits of several SOEs (SSGCL, HESCO, and PESCO) because of their size and importance in their sectors.

As agreed under the SBA, the government will not only have to compile and disseminate quarterly national accounts for the first quarter of FY24, but also revise the annual estimates for FY23 by November 2023, for these entities.

Reportedly, the IMF has expressed concern over not revising upward gas prices since July 1, 2023.

Sui gas companies have reported significant losses, for which the IMF has sought a substantial increase in gas rates to recover such losses incurred during July-September, sources added.

The caretaker Finance minister Shamshad Akhtar will also summon the meeting of the Economic Coordination Committee, in the coming week, to address the concerns of the IMF.

As per the agreement, on successful completion of review, Pakistan will receive the next instalment of $700 million from the IMF.