Major progress has been made toward the approval of Pakistan’s next $1.2 billion tranche from the International Monetary Fund, with an important meeting of the IMF Executive Board scheduled for May 8.
The board is expected to take up Pakistan’s third economic review under the Extended Fund Facility and the second review of the climate-focused RSF program.
The IMF Executive Board meeting has been convened for May 8, marking a key step in the approval process for Pakistan’s next tranche. The meeting is expected to consider the third economic review under the Extended Fund Facility program.
The board is also likely to review the second assessment under the Resilience and Sustainability Facility program linked to climate change.
Staff-level agreement reached in March
Pakistan and the IMF reached a staff-level agreement on March 27. According to sources, Pakistan has fulfilled most of the IMF’s conditions required for the release of the next tranche.
This has strengthened expectations that the board may approve the disbursement during the upcoming meeting.
Sources in the Finance Ministry said petroleum levy collection is expected to exceed the target of Rs1,468 billion. The government is also considering a further increase in the petroleum levy.
The move comes as Pakistan continues efforts to meet revenue targets under the IMF program.
IMF urges end to subsidies
According to sources, the IMF has urged the government to end subsidies as part of ongoing economic reforms. The government has assured the IMF that it will continue fiscal discipline and keep the reform process on track.
Officials say the government has also claimed improvement in the economy and a reduction in inflation.
Despite progress on the IMF front, economic risks remain. Sources said tensions in the Middle East continue to pose challenges for Pakistan’s economy, particularly because of their potential impact on energy prices and external financing conditions.
The government has assured the IMF that it will maintain fiscal discipline despite these risks.
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