• Wednesday, May 29, 2024

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Pakistan facing ‘exceptionally high’ risks, needs more support: IMF

Islamabad has given an undertaking to ringfence its fiscal programme

Pakistan finance minister Ishaq Dar (Photo by SHAUN TANDON/AFP via Getty Images)

By: Chandrashekar Bhat

PAKISTAN needs another IMF programme and support from other multilateral lenders beyond the coming election cycle and the ongoing standby arrangement, according to the Washington-based global lender.

The Dawn newspaper reported that the International Monetary Fund said this in a 120-page report released on Tuesday (18), which analysed Pakistan’s macroeconomic outlook.

The report is based on the Memorandum of Economic and Fiscal Policies (MEFP) signed by finance minister Ishaq Dar and State Bank governor Jameel Ahmed.

“Resolving Pakistan’s structural challenges, including long-term BOP (balance of payments) pressures, will require continued adjustment and creditor support beyond the current programme period,” the Fund said.

The IMF last week gave a final nod to the $3 billion bailout programme for Pakistan to support the government’s efforts to stabilise the country’s ailing economy.

“A possible successor arrangement could help anchor the policy adjustment needed to restore Pakistan’s medium-term viability and capacity to repay,” the report said.

The IMF assessment noted that Pakistan’s economic challenges were complex and multifaceted, and risks were exceptionally high.

“Addressing them requires steadfast implementation of agreed policies, as well as continued financial support from external partners. Consistent and decisive implementation of programme agreements will be essential to reduce risks and maintain macroeconomic stability,” it said.

On its part, according to the report, the government has given an international undertaking for immediately notifying an increase in electricity rates and a more than 40 per cent increase in gas rates, as the gas sector circular debt is now competing with power sector losses.

The government has also promised renegotiation of power-purchase agreements with remaining power producers (including Chinese) or prolonging their debt servicing tenors.

In the gas sector, the government has committed to immediate notification of gas tariff adjustments determined by Ogra, besides merging the gas rates for both local and imported natural gas through a weighted average tariff.

The government has also given an undertaking to ringfence fiscal programme as envisaged in the recent budget and other commitments with the IMF.

(PTI)

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