Pakistan's Prime Minister Reveals Plans for Last IMF Programme
In a groundbreaking announcement, Pakistan's Prime Minister Shehbaz Sharif unveiled his government's progress in meeting the conditions set by the International Monetary Fund (IMF) for the completion of its latest loan programme, which he believes will be the country's final engagement with the IMF.
The IMF staff-level agreement, signed on July 12 for a $7 billion programme spanning 37 months, is pending approval from the Fund's executive board, contingent on confirmation of financing assurances from development and bilateral partners. Sharif assured the public that his government is diligently working to fulfill all IMF conditionalities.
Once the programme receives board approval, Pakistan will enter a "new phase," with hopes that this will mark the end of the country's reliance on IMF programmes. However, delays in approval have been attributed to a lack of additional financing and outstanding energy sector subsidies.
Addressing concerns over unresolved debt in Pakistan's power sector, the IMF has placed a strong emphasis on restructuring to stabilize the economy. The impact of the previous IMF bailout, which included significant power tariff hikes, has been felt by the lower and middle classes, leading to a decline in household power consumption.
Finance Minister Muhammad Aurangzeb expressed optimism about securing board approval in September, citing progress in negotiations with the IMF. Additionally, Pakistan's central bank chief revealed that the country is close to securing $2 billion in external financing, a key requirement for IMF approval.
Moody's recent upgrade of Pakistan's rating to Caa2 reflects growing confidence in the country's external financing prospects following the IMF staff-level agreement. The rating agency expects IMF board approval to follow in the coming weeks.
In conclusion, Pakistan's journey towards completing its IMF programme signifies a pivotal moment in the country's economic trajectory. The successful implementation of IMF conditions could pave the way for sustainable economic growth and stability, with potential benefits for all segments of society. As investors and observers, it is crucial to monitor these developments closely and assess their implications for the broader financial landscape.