Pakistan, IMF reach agreement on $6 billion Extended Fund Facility loan

ISLAMABAD: International Monetary Fund (IMF) has said that it has reached a staff-level agreement with Pakistan in the seventh and eighth aggregate reviews of the $6 billion Expansion Fund (EFF) loan.
“The immediate priority is stabilizing the economy through consistent implementation of the recently approved budget for fiscal year 23, continued compliance with market-determined exchange rates and key monetary policy. active and prudent,” an IMF statement said.
“It is important to expand social safeguards to protect the most vulnerable, and accelerate structural reforms, including improving the performance of state-owned enterprises (SOEs) and governance. treatment,” it added.
The discussion was concluded by an IMF team led by Nathan Porter and the deal must be approved by the IMF Executive Board of Directors.
“Approximately $1,177 million ($894 million) will be available, bringing the total disbursements under the program to approximately $4.2 billion,” Porter said through the statement.
The SDR is an international reserve asset, created by the IMF in 1969 to supplement the official reserves of its member countries.
“Pakistan is at a challenging economic time. The difficult external environment combined with cyclical domestic policies has driven domestic demand to unsustainable levels. The economy has grown too hot. leading to large fiscal and external deficits in fiscal year 22, contributing to inflation and eroding reserve buffers”. it reads.
The IMF Governing Council will consider extending the EFF to the end of June 2023 and increasing access by SDR 720 million, bringing total access to approximately US$7 billion to support program implementation and response. meet higher financial needs in fiscal year 23 , as well as catalyze additional financing.
The implementation of the outlined policies will help facilitate more inclusive and sustainable growth.
Due to the increased uncertainty existing in the global economy and financial markets, the IMF staff wanted the Pakistani Authorities to be ready to take any additional measures necessary to meet the requirements. program goals.
“The agreement with the Foundation set the stage to bring [the] the country got rid of economic difficulties”, Prime Minister Shehbaz Sharif say as quoted by Dawn newspapers.
On the financial side, there were deviations from the policies agreed in the previous review, partly reflecting the fuel and electricity subsidies announced by the authorities in February. The team emphasizes the urgency of concrete policy actions, including in the context of fuel and energy subsidy removal and fiscal year 2023, to achieve the program’s goals.
The IMF team looks forward to continuing dialogue and close engagement with the Pakistani government on policies to ensure macroeconomic stability for the benefit of all Pakistanis, reports Business recorder.

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