Business: A staff-level agreement (SLA) has been signed between Pakistan and the International Monetary Fund (IMF) on Wednesday regarding the loan program. After this agreement, the way has been opened for Pakistan to get the next installment of $1.2 billion. IMF will provide Pakistan an amount of $ 1 billion under the Extended Fund Facility (EFF) and $ 200 million under the Resilience and Sustainability Facility (RSF).
Last week, an IMF mission led by Ieva Petrova completed talks with Pakistani officials. The talks related to the second review of the EFF, scheduled for 2024, and the first review of the RSF, agreed this year. However, the SLA could not be signed then.
Pakistan’s economic recovery is coming back on track
In a statement issued Wednesday morning, IMF mission chief Ieva Petrova said the staff-level agreement is now subject to approval by the IMF’s Executive Board. Petrova said that with the support of EFF, Pakistan’s economic program is strengthening macroeconomic stability and rebuilding market confidence.
He further said that the country’s economic recovery is on track. The current account in FY 2024-25 is in surplus for the first time in 14 years, the fiscal balance program is better than target, inflation is under control, external reserves have strengthened and financial conditions are improving as sovereign spreads have narrowed significantly. However, he said the recent floods have adversely affected the country’s landscape, especially the agricultural sector. Due to this, the estimated gross domestic product (GDP) for the financial year 2026 has come down to about 3.25-3.5 percent.
He said the authorities are committed to meeting the primary surplus of 1.6 per cent of GDP in the FY2026 budget, making sustained efforts to raise revenue through tax policy and compliance measures. Are prepared to take necessary action if revenue shortfalls threaten program objectives.
Target to keep inflation within the range of 5 to 7 percent
The IMF official said the State Bank of Pakistan (SBP) is committed to a prudent monetary policy stance to ensure that inflation remains within the target range of 5 to 7 percent.
Petrova said that the Government of Pakistan is committed to prevent the problem of circular debt from increasing in the energy sector. He informed that the Government is working on maintaining a progressive tariff structure ensuring timely tariff adjustments and cost recovery. He further said that the recent floods and the devastating floods of 2022 have further highlighted the need to strengthen climate resilience in Pakistan.
