What after staff level agreement

ISLAMABAD: The staff level agreement between Pakistan and IMF indicates that both sides have agreed over broader framework for fresh bailout package of $6 billion under 39 months Extended Fund Facility (EFF) but it will be subject to approval of the Fund’s Executive Board.

With this staff level agreement with the IMF, Pakistan’s Advisor to PM on Finance Dr Abdul Hafeez Shaikh and newly appointed Governor State Bank of Pakistan (SBP) Reza Baqir will jointly sign Letter of Intent (LOI) along with Memorandum of Economic and Financial Policies (MEFP) document to formally request the IMF’s executive board for granting approval of $6 billion package for Pakistan.

The staff report along with signed LoI and MEFP will be circulated among the Executive Board members and it takes four to six weeks to formally approve the loan package for the recipient country .

It is expected that the IMF Executive Board will consider Pakistan’s request for approving bailout package of $6 billion by end June or early July after implementation on all prior actions agreed with the IMF at staff levels through the upcoming budget for 2019-20 and other administrative steps.

The autonomy to the SBP is another condition of the IMF program. Under this package, the SBP’s intervention into currency market has been curtailed and brought under a mechanism under which the central banks would have certain limit to intervene into the market but its intervention would be brought at zero by end of every quarter of the financial year.