The State Bank of Pakistan (SBP) Governor, Jameel Ahmad, stated on Thursday that there were no hurdles from the central bank’s side in reaching a staff-level agreement with the International Monetary Fund (IMF), suggesting that any outstanding issues might be related to the federal government.
Speaking to the media after a Public Accounts Committee (PAC) meeting, he expressed optimism that the agreement would be finalised soon but did not provide a specific date, despite it being overdue since March 14.
During the PAC meeting, it was also revealed that the federal government was set to grant “emperor-like powers” to Finance Minister Muhammad Aurangzeb, allowing him to approve up to five special honoraria for employees and officers in various government departments.
“There is no issue pending with us, and any outstanding issue might be on the part of the federal government,” Jameel Ahmad said in response to a question about the IMF agreement timeline. While he did not specify any particular issue, he noted that finalising matters with ministries and divisions takes time.
Pakistan and the IMF held discussions from March 3 to 14 but failed to reach a staff-level agreement due to delays in finalising the Memorandum of Economic and Financial Policies (MEFP). Since the IMF mission’s return to Washington, the Ministry of Finance has conducted at least two virtual sessions with the IMF alongside other stakeholders.
The agreement is currently being finalised in key areas such as trade, taxation, fiscal policies, and circular debt. Federal authorities remain hopeful that a resolution will be reached soon. According to the IMF Board’s schedule, the first programme review and the end-December 2024 performance and continued criteria must be completed by March 15.
“The IMF and Pakistani authorities made significant progress toward reaching a staff-level agreement on the first review under the 37-month Extended Arrangement under the Extended Fund Facility (EFF),” said Nathan Porter, the IMF Mission Chief, following last week’s talks.
Ensuring a smooth continuation of the programme is crucial for maintaining uninterrupted rollovers of foreign debts from four key bilateral creditors: Saudi Arabia, the United Arab Emirates, China, and Kuwait.
The SBP governor noted that during the review talks, the IMF had “substantially reduced” its projection for Pakistan’s current account deficit for the fiscal year. Initially, the IMF had estimated a deficit of $3.6 billion (0.9% of GDP) at the time of finalising the $7 billion deal last year.
Although he neither confirmed nor denied whether the IMF’s revised projection now stands at approximately $400 million (0.3% of GDP), he mentioned that the target for the next fiscal year has yet to be determined.
During discussions, the IMF advocated for maintaining a higher current account deficit, assuming that an increase in foreign exchange reserves would help build external sector buffers.
The SBP’s foreign exchange reserves remained steady at $11.1 billion by the end of last week—barely enough to cover a little over two months of imports.
When questioned, the governor said that the IMF is also revising its inflation and economic growth forecasts. He added that the central bank expects economic growth to remain around 3% for the current fiscal year.
He also highlighted a significant rise in foreign remittances and expressed confidence that they would surpass $36 billion this fiscal year.
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