No compromise on targets set under loan deal, IMF tells Pakistan

• IMF mission arrived in Pakistan day earlier for talks on second review.
• IMF delegation lauds steps taken by Pakistan so far.
• Finance minister says IMF targets will be implemented.

ISLAMABAD: The International Monetary Fund (IMF) has made it clear to Pakistan that it needs to meet the targets set with the global lender under the $3 billion Stand By Agreement, sources told Geo News on Thursday.

The IMF mission led by Nathan Porter had arrived in Pakistan a day earlier to lead the two-week-long talks on the second tranche under the SBA.

According to sources, caretaker Finance Minister Dr Shamshad Akhtar, State Bank of Pakistan Governor Jameel Ahmad, and FBR officials met the IMF delegation today for an introductory session.

Officials, who spoke to Geo News on the condition of anonymity, said that the IMF delegation lauded the steps taken by Pakistan but emphasised that Pakistan has to strictly implement all the targets.

While Dr Akhtar assured the IMF that targets are being implemented under the loan programme and that all the conditions of the IMF have been implemented so far.

The News had reported a day earlier that the finance ministry has evaluated the progress on key targets, including achieving the disbursement of Rs87.5 billion in cash transfers to beneficiaries under the Benazir Income Support Programme (BISP).

IMF, under the quantitative performance criteria, had set the ceiling on the amount of government guarantees related target at Rs4,000 billion but the ministry was able to confine total guarantees to Rs3,853 billion till the end of September 2023. But the real bone of contention in the review talks would be the external financing needs of Pakistan.

The forex market functioning may also become a problematic issue as the IMF had placed the withdrawal of the circular on prioritisation in providing forex for certain types of imports introduced in December 2022 under a structural benchmark. It was placed under structural benchmark as the IMF wanted to ensure “full market determination of the exchange rate”.

The finance ministry had taken note of the progress on quantitative performance criteria, continuous performance criteria, indicative target, and structural benchmark conditions agreed with the IMF for the end of September 2023 under the $3 billion SBA programme.

The government has also kept the circular debt of the power sector within the envisaged limits as it went up by Rs227 billion in the first quarter and touched Rs2.5 trillion by the end of September 2023.

“The target of increasing circular debt has been achieved successfully which was agreed with the IMF under revised circular debt management plan (CDMP),” an official told The News on Monday.

Regarding cash transfer to the beneficiaries under BISP, the official said that the government has so far disbursed Rs89 billion till September 2023 against the envisaged target of Rs87.5 billion. He added that the unconditional and conditional cash transfer was “well within the desired target”.

The official said that the next installment would be disbursed under BISP in November 2023, after which the cumulative disbursement under the programme would touch Rs185 billion. The government has allocated a disbursement target of Rs460 billion for BISP in the ongoing fiscal year.

Meanwhile, State Bank of Pakistan (SBP) officials said that they are on track to meet the floor on net international reserves (NIR) which they said would stand at negative $14.5 billion till the end of September 2023.

The ceiling on net government budgetary borrowing from the SBP stood at Rs4,078 billion for the end of September 2023 as the government’s borrowing from the central bank remained zero.

The indicative target of FBR’s collection has been achieved as the floor on net tax revenues collected by the FBR was envisaged at Rs1,977 billion till the end of September 2023. The ceiling on net accumulation of tax refund arrears stood at Rs32 billion.