The International Monetary Fund (IMF) has called a meeting of its executive board on May 8 to approve the disbursement of more than $1.2 billion to Pakistan under two concurrent programmes – $7bn Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF), IMF officials told.
Pakistan has qualified for the disbursement of about $1bn after the successful third review of EFF and $210 million under the second review of RSF.
The IMF announced on March 27 that it had reached a staff-level agreement for the disbursement of about $1.2bn on the successful conclusion of the third review under EFF and the second review under RSF.
The two sides have since been engaged in changes to fuel pricing and the elimination of subsidies to meet the petroleum levy target budgeted at Rs1.47 trillion for the current fiscal year. The petroleum levy’s collection has already gone beyond Rs1.2tr in the first nine months of the current fiscal year despite the government’s claim of subsidising diesel. The levy seems set to cross the Rs1.47tr target with ease in the remaining three months of the fiscal year.
However, the government is still considering increasing the levy on petrol or reviving the levy on diesel to make up for the Federal Board of Revenue’s shortfall. The Fund has also been advising the government to phase out the fuel subsidy. Moreover, Pakistan has been holding discussions with the IMF regarding flexibility in its programme’s contours, which would be finalised in next year’s budget. The finance minister recently announced that Pakistan was committed to fiscal discipline while seeking flexibility in light of evolving global and regional challenges.
While announcing the SLA on March 27, IMF said the programme’s implementation by Pakistan under the EFF remained broadly aligned with the authorities’ objectives to strengthen public finances, ensure inflation remains durably within the State Bank of Pakistan’s target range, advance reforms to improve the viability of the energy sector, and deepen structural reforms, while strengthening social protection and rebuilding health and education spending.
The authorities’ climate reform agenda, backed by the RSF, is progressing, and the authorities remain committed to implementing comprehensive reforms and policies that enhance resilience and reduce vulnerabilities to climate-related risks.
The talks were held in-person in Karachi and Islamabad from February 25 to March 2 and virtually afterwards.
According to IMF mission chief Iva Petrova, subject to IMF board’s approval, Pakistan will have access to about US$1bn under the EFF and about US$210m under the RSF, bringing total disbursements under the two arrangements to about US$4.5bn.