Pakistan achieves satisfactory results under IMF program

January 22, 2024 (MLN): Pakistan's overall performance against end-September Quantitative Performance Criteria (QPCs), Indicative Targets (ITs), and Structural Benchmarks (SBs) under the Standby Arrangement was satisfactory, the International Monetary Fund (IMF) said in the first review report published.

Pakistan met six QPCs at end September 2023 set by the IMF.

These include the floors on net international reserves of the SBP, and on targeted cash transfers spending (BISP).

Meanwhile, it includes the ceilings on; the SBP's FX swap/forward book, net domestic assets of the SBP, net government budgetary borrowing from the SBP, and the amount of government guarantees.

Pakistan also met the two continuous QPCs on zero new flow of SBP credit to the government, and zero external public payment arrears.

On the other hand, the ceiling on the general government primary budget deficit was missed by a small margin, with this deviation accounted for by technical factors (exchange rate valuation of external financing flows).

The authorities met three end-September ITs, which includes the floors on; net tax revenue collected by FBR, and budgetary health and education spending, while the ceiling on net accumulation of tax refund arrears.

However, the IT on power sector payment arrears was missed by a large margin, mostly due to under-recoveries in August as well as a lower-than anticipated tariff set in the annual rebasing.

Furthermore, the SBs on the notification of the FY24 annual rebasing, and the compilation and dissemination of quarterly national accounts were met.

The continuous SB on the average premium between the interbank and open market exchange rate was missed from mid-August to early-September, but subsequent structural reforms in the EC sector should enhance governance and transparency and reduce the risk of future deviations.

Significant progress was made on the end-November SB regarding the enhancement of State-Owned Enterprise (SOE) governance.

This includes the operationalization of the SOE Act into a policy clarifying ownership arrangements and roles, as well as substantial advancements, through ordinance, in amending the Acts of four chosen SOEs to fully implement the new SOE Act.

Although the final amendments remain to be completed via updated ordinance and/or adopted by parliament.

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