What IMF expects from Pakistan

ISLAMABAD: Pakistan and the International Monetary Fund have almost agreed on a programme for a period of three years and agreement in this regard is likely to be inked in June before or soon after budget 2019-20, The News reliably learnt on Sunday. Further details of the agreement finalised will not be made public till the agreement is signed.

IMF Managing Director Christine Lagarde in a meeting with Prime Minister Imran Khan promised to support Pakistan’s economic reforms when both met on the sidelines of World Government Summit in Dubai.

Sources close to the finance ministry confided to this correspondent that IMF had previously asked for strict measure on policy rate, rupee value against dollar and tax collection target by the FBR. Though most of the modalities have been agreed between Pakistan and IMF but lot of work would have to be done before a final agreement is reached by May/June. Most of the actions, on demand of the IMF would be part of the next year budget, said officials involved in dialogue with the IMF, adding that “broad understanding had been reached in Dubai”. The sources further revealed that the revenue collection target for next budget would be fixed by the IMF and could be well above Rs4.7trillion. Further, upward adjustments in SBP’s policy rate and exchange rate depreciation would also be worked out, The News learnt. Then prices of utilities will also be worked out before the next budget and will be shown as budget decisions instead of IMF demand. Pakistan has also come up with a plan to get relief of subsidy given to public sector entities before the agreement and details in this regard have already been agreed in dialogue with IMF team, it was further learnt.

“There was a convergence of our views on the need to carry out deep structural reforms to put the country on the path of sustainable development in which the most vulnerable segments of society are protected,” tweeted Prime Minister Imran Khan after his meeting with IMF Managing Director Christine Lagarde in Dubai.

A press release issued by the IMF stated that Ms Lagarde told the prime minister that IMF is ready to support Pakistan as she highlighted that decisive policies and a strong package of economic reforms would enable Pakistan to restore the resilience of its economy and lay the foundations for stronger and more inclusive growth.

The IMF head further said the two sides discussed Pakistan’s economic prospects in the context of a possible IMF-supported programme. “Protecting the poor and strengthening governance are key priorities to improve people’s living standards,” she added.

Sources in the finance ministry stated that most of the points were agreed upon in a video conference between Finance Minister Asad Umar and IMF team in Washington before reaching Dubai to attend the World Government Summit.

A statement issued by ministry of finance said prime minister and IMF chief Lagarde had a meeting on the sidelines of the World Government Summit. The premier appreciated IMF’s support to Pakistan and shared his vision for nation-building. He explained the government’s commitment for undertaking structural and governance reforms. The statement said the IMF chief “acknowledged the steps taken so far by the Pakistani government for stabilising the economy and said the IMF will remain engaged in supporting Pakistan in sustaining its economic recovery.

The two sides agreed working together on policy priorities and reforms aimed at reducing imbalances and laying the foundations of a job creating growth path in Pakistan. In this connection, deliberations between Pakistani authorities and IMF staff will continue to finalise an agreement on the contours of a programme, the statement said.

In a separate statement issued by the IMF headquarters, Ms Lagarde was quoted as saying she “had a good and constructive meeting with Prime Minister Imran Khan, during which we discussed recent economic developments and prospects for Pakistan in the context of ongoing discussions toward an IMF-supported programme”.