The Khyber Pakhtunkhwa cabinet has voiced its apprehensions regarding specific elements of the International Monetary Fund (IMF) bailout agreement and is seeking further clarification from the federal government. KP Adviser for Finance, Muzammil Aslam, expressed this sentiment during an interview with Geo News on Friday, highlighting the cabinet’s decision to pursue clarity on the matter after reviewing the details of the IMF deal.
While the provincial cabinet welcomed the approval of the IMF package, which consists of a $7 billion Extended Fund Facility (EFF), they emphasized the necessity of understanding certain points before moving forward. The clarification requests will be submitted to KP Chief Minister Ali Amin Gandapur, ensuring that the provincial leadership is fully informed and aligned with the federal government’s plans.
The IMF’s recent approval marks a significant step for Pakistan, as it comes at a time when the country is navigating a complex economic landscape. The first tranche of $1.1 billion is anticipated to be released by September 30, which could provide some immediate relief. However, the broader implications of the bailout hinge on the government’s commitment to implementing critical reforms, including efforts to broaden the tax base. This reform agenda is crucial as it has been prominently featured in the budget passed by the current administration, which places considerable emphasis on tax generation.
In addition to the bailout details, Nathan Porter, the IMF Mission Chief for Pakistan, has revealed that several friendly nations have extended substantial financing assurances to Pakistan, which further supports the country’s financial stability during this transitional period. These assurances are crucial, especially considering the rollover of $12 billion in bilateral loans owed to these countries.
Finance Ministry sources have indicated that the interest rate on the new loan is projected to be less than 5%, with the potential for the second installment to be disbursed within the current fiscal year. This favorable rate may ease some financial burdens for the government as it seeks to stabilize the economy.
Under the new EFF-supported program, key priorities have been outlined. These include restoring policy credibility and ensuring macroeconomic sustainability through the effective implementation of sound policies. Additionally, there is a strong focus on enhancing competition and productivity, reforming state-owned enterprises, and building climate resilience to address future challenges.
As the situation unfolds, it will be essential for the KP government to remain vigilant and proactive in engaging with federal authorities to ensure the effective utilization of the IMF support and the successful implementation of necessary reforms.
