IMF updates Western envoys on Pakistan’s SBA progress

The International Monetary Fund (IMF) has continued its discussions with Pakistani officials over the progress of the current $3 billion standby agreement (SBA). 

According to a news report, the Fund also briefed European and American ambassadors on Pakistan’s financial situation, including the planned introduction of a new pension scheme set for July, aimed at reducing post-retirement benefits for government employees.

The briefing, attended by representatives from the United States, European Union, and other nations, highlighted Pakistan’s strides towards meeting the bailout’s objectives and its contemplation of a subsequent bailout, though details on this remain unspecified.

Concerns were raised over Pakistan’s low revenue collection, particularly from provinces, prompting the IMF to suggest revisiting the National Finance Commission (NFC) award to motivate provincial revenue growth. 

The transfers under the NFC make around 90% of the total provincial income. The Centre transfers 57.5% of its tax collection to the provinces as their share in the NFC.

The global lender emphasised the need for the federal government to enhance revenue collection, especially from sectors like real estate and construction.

Furthermore, discussions touched on the privatisation efforts, including the planned sale of Pakistan International Airlines (PIA) and a broader privatisation strategy for State-Owned Enterprises (SOEs). 

The IMF advised maintaining tight monetary policies to manage inflation, reflected in the State Bank of Pakistan’s decision to keep the policy rate at 22%.

In related developments, US Ambassador Donald Blome met with Foreign Minister Ishaq Dar to discuss economic reforms and bilateral issues, underscoring Dar’s ongoing influence in economic affairs despite not holding the Finance Ministry portfolio.