Islamabad:
The International Monetary Fund (IMF) has confirmed that its Executive Board will meet on September 25 to discuss the approval of Pakistan’s $7 billion Enhanced Capital Facility (EFF). The loan is crucial to stabilizing Pakistan’s economy, which is struggling with rising inflation and shrinking inventories.
IMF spokeswoman Julie Kozak announced the meeting during a press conference Thursday, saying, “We are very pleased to say now that the board meeting is scheduled for September 25.”
This announcement comes after Pakistan secured the necessary funding assurances from development partners.
The $7 billion loan package had been under discussion since May, and a staff-level deal was reached in July. However, Pakistan faced delays in finalizing the approval by the IMF Board. The government had to meet strict IMF conditions, including the imposition of Rs 1.8 trillion in new taxes and electricity price hikes of up to 51%.
Among other conditions, Pakistan agreed to stop the creation of any new special economic or export processing zones. The country also accepted that tax incentives for existing zones would not be extended after they expire. These measures are part of a wider set of industrial policy changes that, critics say, effectively transfer control of key economic decisions to the IMF.
State Bank of Pakistan (SBP) Governor Jameel Ahmad confirmed that the country has arranged over $2 billion in external financing from lenders other than the IMF. “All these assurances and external funding have already been arranged by the government and I don’t see any other obstacles now to bring our case to the board,” Ahmad said during an analyst briefing on Thursday.
Prime Minister Shehbaz Sharif, addressing the federal cabinet earlier in the day, praised the progress in negotiations with the IMF. “We are moving in the right direction with the Fund and I hope for a positive result,” he said, while acknowledging the harshness of the measures imposed.
The prime minister thanked Pakistan’s friendly countries for their support, stressing the need to free Pakistan from dependence on foreign loans and build a self-reliant economy.
Kozack added that the successful implementation of the nine-month waiting agreement from 2023 had stabilized Pakistan’s economy. He pointed to consistent policy making that had brought about a return to growth, deflation and an increase in the country’s international reserves.
Despite meeting these tough conditions, Pakistan has struggled to secure a date for IMF board approval, raising concerns about the country’s economic future. However, the upcoming meeting on September 25 offers hope for much-needed relief, with IMF approval possibly unlocking additional financial support from other international partners.
Meanwhile, Finance Minister Muhammad Aurangzeb announced that all issues with the International Monetary Fund have been successfully settled.
“Alhamdulillah, all negotiations with the IMF have been completed smoothly,” Aurangzeb said in a statement, expressing gratitude to Prime Minister Shehbaz Sharif’s team, the IMF negotiating team and relevant institutions who played a central role in the final stages of the deal. .
The minister confirmed that the IMF board will formally approve the deal later this month. “The economy is now moving from stability to growth,” he said.
Aurangzeb highlighted the reduction in the policy rate, predicting that it would lead to increased investment and business activity in the country. “Economic activity will grow, creating more employment opportunities,” he added.
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