Pakistan's PM Focuses on IMF Loan Program Completion Steps
Pakistan's Prime Minister's Commitment to IMF Conditions
Pakistan's Prime Minister, Shehbaz Sharif, recently emphasized the government's dedication to fulfilling the requirements set by the International Monetary Fund (IMF) for its ongoing loan programme. He expressed hope that this programme would potentially be the last Pakistan would need to enter.
Details on the Loan Programme
On July 12, Pakistan entered a staff-level agreement with the IMF for a substantial $7 billion programme, expected to last 37 months. However, final approval from the IMF's executive board remains pending, particularly due to the need for confirmed financial backing from various development and bilateral partners.
Implementation of Conditionalities
During a televised address, Sharif reassured the public, stating, "Whatever conditionalities the IMF has, we are working on implementing all of them." This statement reflects the government's proactive approach to ensure smooth progress once the board provides the needed approval.
Challenges and Delays
Reports indicate that the delay in obtaining IMF approval is tied to unfulfilled financial commitments, including unresolved issues surrounding energy sector subsidies. Officials from the Punjab province have indicated a lack of communication from the federal government regarding these subsidy matters, urging the media to stay away from speculation on sensitive national issues.
Focus on the Power Sector
The IMF has been particularly concerned with the mounting debts in Pakistan's power sector. As the country navigates the impacts of a prior $3 billion bailout, the adverse effects are being felt by low and middle-income households. Increased power tariffs from the previous financial agreement have led to a noticeable drop in household energy use, marking the first anticipated decline in 16 years.
Progress Made Towards IMF Approval
Recently, Finance Minister Muhammad Aurangzeb communicated positive updates regarding Pakistan's progress with the IMF, aiming for board approval in the near future. The central bank's chief also noted the advanced status of securing $2 billion in external financing, crucial for moving forward with the IMF programme.
Outlook from Credit Rating Agencies
Adding to the optimism, Moody's upgraded Pakistan's credit rating to Caa2, highlighting the increased likelihood of securing external financing following the agreement with the IMF. The rating agency expects final approval from the IMF board to be granted within the coming weeks.
Frequently Asked Questions
What are the main points of Pakistan's current loan programme?
The programme is a $7 billion agreement with the IMF, focused on economic recovery and implementation of required conditionalities over 37 months.
Why is IMF approval delayed?
The delay is primarily due to the need for additional financing assurances and unresolved energy subsidies that have not yet been resolved.
How has the IMF programme affected Pakistani households?
Households have experienced higher power tariffs, leading to reduced energy consumption and financial strain on both the poor and middle classes.
What has been said about external financing?
The central bank has confirmed they are in advanced stages of securing $2 billion, which is essential for IMF's approval of the loan programme.
What is Moody's stance on Pakistan's economic situation?
Moody's upgraded Pakistan's credit rating, indicating improved prospects for securing external financing following the IMF agreement, anticipating board approval shortly.
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