FinMin Aurangzeb optimistic about IMF deal breakthrough

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Finance Minister Muhammad Aurangzeb has expressed optimism about the ongoing negotiations with the International Monetary Fund (IMF), stating that talks are in their final stages and there are no significant obstacles remaining.

Speaking to the media on Friday, the minister confirmed that Pakistan is on track to meet the IMF's economic targets and reassured that the discussions will soon conclude positively.

Aurangzeb emphasised Pakistan’s commitment to fiscal discipline, highlighting the government’s adherence to the financial framework agreed upon with the IMF.

The talks are focused on securing the next tranche of funding, which is crucial for Pakistan’s economic recovery.

The IMF Mission Chief to Pakistan, Nathan Porter, also confirmed last week that significant progress had been made toward reaching a Staff-Level Agreement (SLA) regarding the first review of Pakistan’s $7 billion loan programme.

The success of these talks will pave the way for Pakistan to receive about $1 billion as part of the second instalment of the loan.

Additionally, Aurangzeb addressed climate change challenges, stressing the urgent need for structured climate financing to combat environmental risks.

He acknowledged the increasing threats posed by climate change, including the rapid melting of glaciers and economic disruptions caused by environmental changes, particularly in Lahore.

The finance minister also highlighted international pledges for flood rehabilitation, although the country has struggled to fully utilise these resources due to implementation challenges.

Earlier on Thursday, the central bank governor, Jameel Ahmad, said that there was no hurdle from the State Bank of Pakistan (SBP)'s side in reaching a staff-level agreement with the International Monetary Fund (IMF), and any outstanding issues might be related to the federal government.

While talking to the media after a meeting of the Public Accounts Committee (PAC), the governor hoped that the staff-level agreement would be reached very soon with the IMF. However, he did not provide a firm date for the deal, which has been overdue since March 14.

The PAC meeting also revealed that the federal government was about to give "emperor-like powers" to Federal Finance Minister Muhammad Aurangzeb to approve up to five special honoraria for employees and officers of various government departments.

"There is no issue pending with us, and any outstanding issue might be on the part of the federal government," said Jameel Ahmad while responding to a question about the timing of the staff-level agreement with the IMF. The governor did not specify any particular issue but stated that finalising matters with ministries and divisions takes time.

Pakistan and the IMF held talks from March 3 to 14, but both sides could not reach a staff-level agreement due to delays in finalising the Memorandum of Economic and Financial Policies (MEFP). After the mission returned to Washington, the Ministry of Finance held at least two virtual sessions with the IMF in the presence of other stakeholders.

The IMF and Pakistan are in the process of finalising the MEFP in the areas of trade and taxes, along with fiscal and circular debt numbers. The federal authorities remain hopeful that the agreement 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.