June 25, 2023 (MLN): As earlier highlighted, hectic last-minute diplomacy is on the way to revive the IMF program and conclude the 9th review. Both parties seem to be willing to meet halfway. This has come belatedly after PM's call and meeting with IMF MD. PM is the good cop here.
In the last 24-48 hours, Pakistan is moving fast to concede more ground. Several steps are taken that bring us closer and closer to miraculous resumption:
SBP removes restrictions on and opens all imports
Fiscal Deficit to reduce PKR 300B ($ 1B / 0.3%. GDP)
Additional Taxes worth PKR 215B
Reduction in Expenses by PKR 85B
Total revenue up from PKR 9.2T to 9.4T
BISP up from PKR 450B to PKR 466B
PDL increase from PKR 50 to 60/liter
10% Tax on bonus shares
Pension reforms have also been introduced:
Pension for spouse and dependent only for 10 years
Multiple pensions are not permissible
NSS Investment limit increased from PKR 5M to 7.5M
The intent now is visible. FinMin is humbling now to repeat "If IMF agrees then great otherwise we are surviving". Efforts have been put in at technical level talks clearly with an abrupt opening of imports and budget tightening.
Perhaps, perhaps this will just be enough to unlock the 9th review tranche and receive funds from IMF, ADB, WB, AIIB, UAE, and Saudi Arabia. That should be credit positive event, increase our FX reserves and reduce Eurobond yields.
This is the last chance until after the elections when the new regime takes over and renegotiates by January 24. It would be unwise to let the country crawl until then without clutches. The ball is in IMF's court.
