Caretaker govt calls for swift engagement with IMF

Islamabad: The caretaker government has advised the incoming administration to swiftly engage with IMF officials to secure a new medium-term facility, setting a foundation for implementing challenging reforms.

Following the February 8, 2024 General Elections, hopes are high for a robust strategy to rejuvenate the economy and build upon recent progress.

The Finance Ministry credits recent measures for restoring market confidence and stimulating economic activity, with GDP growth rebounding to 2.1% in Q1 FY2024 after consecutive quarters of decline.

Efforts to curb unproductive spending and enhance revenue streams have yielded positive results.

During Jul-Dec FY2024, the government achieved a primary surplus of Rs 1.5 trillion, exceeding the IMF SBA target of 0.5% of GDP. Tough decisions, such as trimming subsidies on power and gas, bolstered fiscal accounts. No supplementary grants were issued, and provincial ADPs absorbed projects within their domain.

Additionally, funds were directed towards 9.3 million vulnerable households. Despite import slowdowns and zero GST on petroleum, FBR tax collections surged by 30% to Rs 5.15 trillion. Domestic taxes soared by 40%, buoyed by economic resurgence and improved corporate profitability.

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Addressing Pakistan’s debt burden, the government highlights the need for robust tax collection, revitalizing state-owned enterprises (SOEs), and managing high interest rates. The successful IMF SBA review in November 2023 unlocked a $700 million disbursement in January 2024.

Key reforms include power tariff adjustments, enhancing SOE governance, and implementing a Circular Debt Management Plan. The Finance Ministry urges the new government to finalize the IMF program’s last review swiftly and negotiate a new medium-term facility. Essential reforms include FBR restructuring, SOE privatization (including PIA), and improved governance for sustainable economic growth.