The International Monetary Fund (IMF) has put forward 39 strict conditions for the second installment of the IMF’s Extended Fund Facility (EFF) for second loan installment approval.
The government has implemented stringent measures, including mandatory asset disclosures for civil servants and their families, to secure a $1.1 billion tranche from the IMF.
These conditions require civil servants to disclose their assets, eliminate tax amnesties and exemptions, and produce a governance and corruption assessment report. The IMF has also established benchmarks that include maintaining foreign exchange reserves equivalent to three months of import bills, achieving fiscal targets, and restructuring public finances.
Additional reforms mandated by the IMF involve keeping the difference between open market and interbank exchange rates within 1.25%, and ensuring that the State Bank of Pakistan’s foreign exchange reserves reach $8.65 billion by the fiscal year’s end.
The Ministry of Finance confirmed that adherence to 22 specific points is crucial for qualifying for the $1.1 billion installment, with a key deadline of February 2025 for civil servant asset disclosures. The IMF has insisted on no extra budget grants and emphasized the need for fiscal discipline.
The document outlines a reduction in public sector liabilities, capping total outstanding government guarantees at Rs5.6 trillion, while also focusing on limiting power sector arrears to Rs417 billion and controlling tax refund backlogs to Rs24 billion.
During a briefing to the National Assembly’s Standing Committee on Finance, Finance Minister Muhammad Aurangzeb noted that macroeconomic stability had improved over the past 14 months but stressed the importance of reducing intermediaries to combat inflation. He added that the Economic Coordination Committee (ECC) is developing strategies for monthly reviews of food prices.
Aurangzeb emphasized that the current IMF loan agreement represents Pakistan’s final message to the international community, necessitating urgent reforms in taxation, energy, and population control. He also highlighted concerns regarding climate change, child stunting, and the increasing number of out-of-school children.
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Lastly, he mentioned that Pakistan is finalizing a 10-year partnership framework with the World Bank to enhance economic stability, citing improvements in the economy that have positively impacted the stock market.
