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ISLAMABAD: Besides the upcoming election cycle and the current standby agreement, Pakistan needs another IMF program and help from other multilateral lenders, the lender said in a report released on Tuesday, according to Don.
“Resolving Pakistan’s structural challenges, including long-term balance of payments pressures, will require continued adjustment and creditor support beyond the current program period,” the fund said in a 120-page report analyzing Pakistan’s macroeconomic outlook.
The report is based on the Memorandum on Economic and Fiscal Policy (MEFP) signed by the Minister of Finance Ishaq Dar And State Bank Governor Jameel AhmedDawn reported.
Dawn is one of the Pakistani daily newspapers that reports on social, political and economic issues in the country.
“A potential successor arrangement could help anchor the policy adjustment needed to restore Pakistan’s medium-term viability and ability to pay,” the report said.
The IMF assessment noted that the economic challenges facing Pakistan were complex and multifaceted, and that the stakes were exceptionally high.
“Addressing them will require consistent implementation of agreed policies, as well as continued financial support from external partners. Consistent and decisive implementation of program agreements will be essential to reduce risks and maintain macroeconomic stability.
The lender insists another IMF program is needed to solve the structural problems. The government has agreed to notify the public as soon as electricity prices increase by 5 Pakistani rupees (PKR) per unit and gas prices increased by more than 40 percent, according to the report. This is because circular debt in the gas sector is now competing with losses in the electricity sector, according to Down.
The government has promised to renegotiate power purchase agreements with the remaining energy producers (including the Chinese) or to extend their debt servicing, Dawn reported.
In the gas sector, the government has committed to prompt notification of gas tariff adjustments set by Ugra, along with amalgamation of gas rates for both domestic and imported natural gas through a weighted average tariff.
The government has also undertaken to block the fiscal program as envisioned in the last budget and other commitments with the International Monetary Fund.
For this, the government will not allow supplemental grants for any additional unbudgeted spending above the parliamentary level approved in the current fiscal year, at least until the formation of a new government after the election (except in the event of a severe natural disaster).
The government also gave “a commitment not to launch any new tax breaks or grant more new tax breaks in 2023-24 including through budget or statutory regulatory orders without (the assembly’s) prior approval.”
The government has also made agreements with each province on their commitment to achieve a fiscal position at the end of FY24 consistent with the general government’s basic balance target for the fiscal year of PKR 401 billion and to continue to focus on very urgent power sector policies, including no introduction of subsidy fuel, Or cross-subsidies, in fiscal year ’23 and beyond, Dawn reports.
In addition, the government has committed to ensuring monetary and financial stability by returning to a market-determined exchange rate, decreasing inflation toward the target, and rebuilding foreign exchange reserves.
Down said the authorities would refrain from providing guidance or expressing a preference to market participants regarding the exchange rate or regulating demand for forex through administrative procedures.
If the proper functioning of the market is restored, the authorities have committed themselves to maintaining the average premium between interbank and open market exchange rates of not more than 1.25 per cent and not less than 1.25 per cent over any business period of five consecutive business days and to publish daily rates Interbank exchange and the open market.
“Resolving Pakistan’s structural challenges, including long-term balance of payments pressures, will require continued adjustment and creditor support beyond the current program period,” the fund said in a 120-page report analyzing Pakistan’s macroeconomic outlook.
The report is based on the Memorandum on Economic and Fiscal Policy (MEFP) signed by the Minister of Finance Ishaq Dar And State Bank Governor Jameel AhmedDawn reported.
Dawn is one of the Pakistani daily newspapers that reports on social, political and economic issues in the country.
“A potential successor arrangement could help anchor the policy adjustment needed to restore Pakistan’s medium-term viability and ability to pay,” the report said.
The IMF assessment noted that the economic challenges facing Pakistan were complex and multifaceted, and that the stakes were exceptionally high.
“Addressing them will require consistent implementation of agreed policies, as well as continued financial support from external partners. Consistent and decisive implementation of program agreements will be essential to reduce risks and maintain macroeconomic stability.
The lender insists another IMF program is needed to solve the structural problems. The government has agreed to notify the public as soon as electricity prices increase by 5 Pakistani rupees (PKR) per unit and gas prices increased by more than 40 percent, according to the report. This is because circular debt in the gas sector is now competing with losses in the electricity sector, according to Down.
The government has promised to renegotiate power purchase agreements with the remaining energy producers (including the Chinese) or to extend their debt servicing, Dawn reported.
In the gas sector, the government has committed to prompt notification of gas tariff adjustments set by Ugra, along with amalgamation of gas rates for both domestic and imported natural gas through a weighted average tariff.
The government has also undertaken to block the fiscal program as envisioned in the last budget and other commitments with the International Monetary Fund.
For this, the government will not allow supplemental grants for any additional unbudgeted spending above the parliamentary level approved in the current fiscal year, at least until the formation of a new government after the election (except in the event of a severe natural disaster).
The government also gave “a commitment not to launch any new tax breaks or grant more new tax breaks in 2023-24 including through budget or statutory regulatory orders without (the assembly’s) prior approval.”
The government has also made agreements with each province on their commitment to achieve a fiscal position at the end of FY24 consistent with the general government’s basic balance target for the fiscal year of PKR 401 billion and to continue to focus on very urgent power sector policies, including no introduction of subsidy fuel, Or cross-subsidies, in fiscal year ’23 and beyond, Dawn reports.
In addition, the government has committed to ensuring monetary and financial stability by returning to a market-determined exchange rate, decreasing inflation toward the target, and rebuilding foreign exchange reserves.
Down said the authorities would refrain from providing guidance or expressing a preference to market participants regarding the exchange rate or regulating demand for forex through administrative procedures.
If the proper functioning of the market is restored, the authorities have committed themselves to maintaining the average premium between interbank and open market exchange rates of not more than 1.25 per cent and not less than 1.25 per cent over any business period of five consecutive business days and to publish daily rates Interbank exchange and the open market.
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