Washington, 17 April 2024 (TDI): Minister of Finance, Muhammad Aurangzeb highlighted Pakistan’s progress under the 9-month Stand-By Arrangement (SBA) of IMF and ongoing reforms in priority areas of taxation, energy, and privatization.
He is on a trip to Washington to attend the spring meetings organized by the International Monetary Fund (IMF) and World Bank (WB).
An ongoing nine-month, $3 billion loan program with the IMF designed to tackle a balance-of-payments crisis that brought Pakistan to the brink of default last summer will expire this month.
With the final $1.1 billion tranche of that deal likely to be approved later this month, Pakistan has begun negotiations for a new multi-year IMF loan program worth “billions” of dollars, according to the finance ministry.
Finance Minister Muhammad Aurangzeb met with Ajay Banga, President of World Bank Group on Wednesday. World Bank agreed on a 10-year rolling country framework plan.
The statement said the World Bank president assured his “full support” for Pakistan’s reforms and digitalization programs to stabilize the economy and enhance revenues.
Pakistan’s progress on reforms and IMF program
In an interview on Monday, Minister Aurangzeb had said Pakistan would seek at least a three-year IMF program and plans to continue with necessary policy reforms to rein in deficits, build up reserves, and manage soaring debt servicing.
Since the ongoing $3 billion bailout was approved in June last year, Pakistan has implemented several IMF-mandated reforms, such as budget adjustments, increasing interest rates, and higher energy prices.
Among expected reforms under a new program are strengthening public finances through gradual fiscal consolidation, broadening the existing tax base, and improving tax administration, and debt sustainability, all while protecting the vulnerable.
Also Read: Pakistan eyes comprehensive IMF Program for economic overhaul
Pakistan also needs to restore the viability of the energy sector and prevent further accumulation of circular debt arising from subsidies and unpaid bills.
Other reforms will include cutting inflation, stimulating private sector growth, and adopting a market-driven exchange rate to help balance external accounts and rebuild foreign reserves.
Aurangzeb also separately met Masatsugu Asakawa, the President of the Asian Development Bank (ADB) in Washington on Tuesday.
“Discussions focused on further strengthening Pakistan’s partnership with ADB, protecting country envelope of concessional financing and future project pipeline,” a statement from the Pakistani finance ministry said.
