February 17, 2020 (MLN): The statement released by the IMF on Friday came as a respite for the government, following the strict austerity measures which outlined the stabilized economy.
The talks with the IMF seemed to have gone smooth without a staff-level agreement where future targets are finalized. In past, the IMF gave encouraging reviews during the programme when the bilateral ties with the USA were strong.
According to a senior economist, Muzammil Aslam, there are three sticking points which restricted IMF & MOF Staff level agreement:
1- Amendment in NEPRA ACT through Parliament
2- Reassessment of Regulatory Benchmarks a) 100% recovery assumed, b) Structural accumulation of circular debt, 3) Ministry of power will submit revisions to CCI
3) The tariff adjustment on July 1st eliminated the flow of Gas sector arrears
Pakistan has requested waiver in all three structural targets on an account of ongoing progress.
IMF staff concluded that its review and left Pakistan to consult its board where outcomes of the recent visit are in discussion. One can expect the best outcome from this ongoing discussion that Pakistan may get a waiver in all three structural criteria.
On the other hand, this could be the possibility that advance steps may be taken before the board meeting which might not be the favorable outcome for Pakistan whereas Ministry Finance said today that the second and third quarterly reviews would be presented before the International Monetary Fund (IMF) board separately as planned, it said adding that no decision has been taken for any prior actions.
In view of a senior economist, Pakistan might get the waiver in all three reforms if dedication and focus would remain intact. Moreover, the government’s priority is to set off inflationary expectations, he added.
He further added that the speculation related to deadlock with IMF is not true.
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