Pakistan has been trying to take fewer loans to stabilize the economy. The story here is otherwise. Without taking a loan from IMF, it’s a little difficult to survive. After reviewing our performance, IMF has released a loan of $1 Billion, the 6th tranche of the programme.
JUST IN: IMF has approved to release the 6th tranche of $6b loan programme for Pakistan, Finance Minsiter Shaukat Tarin has announced
— Samaa Money (@samaamoney) February 2, 2022
IMF’s Executive Board’s meeting took place in Washington DC. US $1 Billion was released under Extended Fund Facility (EFF) after the sixth review. The meetings were postponed thrice at Pakistan’s request. The SBP Bill 2021 was passed to meet another condition of the International Monetary Fund (IMF). Pakistan had met all the prior conditions required to secure the loan.
Finance Minister Shaukat Tarin shared the news, “I am pleased to announce that IMF Board has approved 6th tranche of their programme for Pakistan.”
I am pleased to announce that IMF Board has approved 6th traunche of their programme for Pakistan.
— Shaukat Tarin (@shaukat_tarin) February 2, 2022
IMF also approved Pakistan’s request for ‘waivers of applicability and non-observance of performance criteria’. They urged Pakistan to make effort to stabilize its economy by policy adjustments. Measures should be taken to create jobs and improve the social status for the benefit of the citizens. The economic activities have resumed after the pandemic but the widening account deficit and rising inflation have started to pressurize.
In a statement, IMF reiterated, “continued commitment to a market-determined exchange rate and a prudent macroeconomic policy mix will help reduce the current account deficit and ease external pressures over the medium term. Further ambitious efforts to remove structural impediments and facilitate the structural transformation of the economy will help unlock sustainable and resilient growth. The recent economic and financial policy efforts, however, were appropriate to safeguard macroeconomic stability and debt sustainability.”
The basic aim of the IMF programme is to support economic recovery post-pandemic and to ensure macroeconomic and debt sustainability. Emphasis is laid on structural reforms for job opportunities that will benefit Pakistan in the long run. They have suggested increasing focus on measures that will strengthen ‘economic productivity, investment, and private sector development, as well as on the challenges posed by climate change.’
IMF has warned, “Pakistan remains vulnerable to possible flare-ups of the pandemic, tighter international financial conditions, a rise in geopolitical tensions, as well as delayed implementation of structural reforms.”
Antoinette Sayeh, Deputy Managing Director and Acting Chair issued the statement, following the Executive Board’s discussion, “Ambitious steps to remove structural impediments and facilitate structural transformation remain essential to boost growth, job creation, and improve social outcomes. The authorities are focused on state-owned enterprises reform, fostering the business environment and reducing corruption, promoting financial inclusion; and addressing the challenges posed by climate change. The Pakistani economy has continued to recover despite the challenges from the Covid-19 pandemic, but imbalances have widened, and risks remain elevated. The authorities’ recent policy efforts to strengthen economic resilience are welcomed. Timely and consistent implementation of policies and reforms remain essential to lay the ground for stronger and more sustainable growth. The authorities have taken important measures to strengthen fiscal policy and put public finances on a sounder footing. Along with careful spending management, revenue mobilization will help to create space for much-needed spending on infrastructure and social protection, while improving debt sustainability. Maintaining the momentum on the reform of personal income taxation and harmonization of general sales taxes is essential. Broader reforms in tax administration and public financial and debt management are expected to further improve the fiscal framework.”
Policies should be devised to combat all the ongoing issues. We hope that Pakistan makes effort to reduce the inflation and account deficit so that the common man which is the most affected of all gets relief.