ISLAMABAD (Ahmed Mughal):- Finally, The Pakistan successfully secured the IMF loan program of $6 billion with some prior conditions after hectic talks of 14 days on Sunday. Pakistan Govt also has to implement on some agreed conditions in next budget to secure the the IMF loan program.
After completion of 14-days Pak-IMF talks, the mission head Mr. Ramirez Rigo issued a statement.
“The Pakistani authorities and the IMF team have reached a staff level agreement”, he said. Both sides agreed on a loan program of 39-month Extended Fund Arrangement (EFF) for about US$6 billion.
“This agreement is subject to IMF management approval and to approval by the Executive Board. It is also subject to the timely implementation of prior actions and confirmation of international partners’ financial commitments”, further said.
The IMF mission chief also said that the govt has to improve public finances and reducing public debt through tax policy and administrative reforms. In this regard it has also to make sure to strengthen revenue mobilization and a more equal and transparent distribution of the tax burden.
At the same time, a comprehensive plan for cost-recovery in the energy sectors and state-owned enterprises. It will also help to eliminate or reduce the quasi-fiscal deficit that drains scarce government resources.
The Mission head also said these efforts will create fiscal space for a substantial increase in social spending. The modernization of the public finance management framework will increase transparency and spending efficiency.
Provinces are committed to contribute to these efforts by better aligning their fiscal objectives with those of the federal government.
The Govt has to improve fiscal management. The authorities will aso engage provincial governments on exploring options to rebalance current arrangements in the context of the forthcoming National Financial Commission.
He said that the forthcoming budget is a first critical step for fiscal strategy. The budget will aim for a primary deficit of 0.6 percent which is 1.9 percent of GDP.
The Govt has to do through eliminating exemptions, curtail special treatments and improve tax administration. The Govt also has to allocate prudent spending growth and scaling up the Benazir Income Support Program. It also has to improve targeted subsidies with the goal of protecting the most vulnerable segments of society.
Autonomy of State Bank
He said that the authorities are committed to strengthening the State Bank of Pakistan’s operational independence and mandate. Referring eliminating the Govt control on exchange rate, He said that a market-determined exchange rate will help the functioning of the financial sector. The mission head said that the State Bank will focus on reducing inflation.
Improving the management of public enterprises, strengthening institutions and governance, continuing anti-money laundering and combating the financing of terrorism efforts, creating a more favorable business environment and facilitating trade are priority areas of the government.