Finance Minister Muhammad Aurangzeb is optimistic that Pakistan will reach a deal with the International Monetary Fund (IMF) on a $6 billion Extended Fund Facility (EFF) this month. Aurangzeb stated that almost all prior actions have been completed and an agreement has been reached with provinces on agricultural income tax. The government plans to request an additional climate resilience facility (CRF) from the IMF, which is a new facility aimed at helping countries vulnerable to climate change.
The finance minister expressed hope that the new program would be concluded this month, and the EFF’s size would be finalized soon. He also mentioned that the government has met almost all prior actions, and the IMF program has helped restore financing from other multilaterals, such as the World Bank’s recent approval for the Dasu Dam.
Aurangzeb discussed macroeconomic indicators, stating that they have improved in recent months, and inflation is expected to increase slightly, but there is still room for reduction in the policy rate of the State Bank. He also mentioned that tax reforms have been implemented, including taxes on real estate, developers, and retailers, and that all tax refunds are being paid to exporters.
The minister also briefed the committee on pension reforms, introducing a contributory pension system for civil employees, effective July 1, and a similar regime for the armed forces, effective July 1 next year. Additionally, five ministries will be wound up during the current fiscal year.
Overall, Aurangzeb’s statements suggest that Pakistan is making progress in its negotiations with the IMF and is committed to implementing economic reforms to stabilize the country’s economy.
