In the last week of October, an International Monetary Fund (IMF) mission is set to arrive in Pakistan for a thorough economic review of the country's standby arrangement agreement. The mission will assess Pakistan's economic performance over the first three months of the current fiscal year.
The IMF delegation will meet with various Pakistani authorities including the Federal Board of Revenue, Ministry of Energy, State Bank of Pakistan, National Electric Power Regulatory Authority, and Oil and Gas Regulatory Authority. These entities have been directed to prepare their implementation reports based on the IMF conditions.
Key points for the economic review will include the energy sector's circular debt, revenue generation by the Federal Board of Revenue (FBR) and market-based currency exchange rates. Additional areas of review will encompass external financing, circular debt management plans, and bond issuance strategies. The global lender team will also evaluate adjustments and rebasing in electricity and gas prices as per the conditions of the standby agreement.
In addition to these economic considerations, political matters are also on the agenda. The IMF mission will hold meetings with various political parties to discuss the upcoming general elections in Pakistan.
The Ministry of Finance has assured the IMF that it plans a reduction of 180 billion rupees in circular debt within the power sector by June 2024. A plan for expenditure reduction is also prepared, which includes measures such as freezing allowances and pensions, and suspending officer recruitment.
Once the economic review is successfully completed, Pakistan is expected to receive the next installment of $700 million from the IMF following approval from its board. This follows a transfer of $1.2 billion by the IMF to Pakistan in July, as part of a $3 billion bailout program spanning nine months aimed at stabilizing the country's struggling economy.
The second tranche talks for this bailout are anticipated to occur in conjunction with the IMF mission's visit in late October. This financial assistance is crucial for Pakistan, which has been grappling with a severe balance of payments crisis and dwindling foreign exchange reserves. The IMF's financial aid is considered a respite for the country amid these economic pressures.
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