The International Monetary Fund (IMF)’s Executive Board will take the sixth review of the $6 billion Extended Fund Facility (EFF) on the agenda in its meeting scheduled for January 28.
The Board calendar updated on its website shows that its meeting has been rescheduled for January 28, 2022, and the agenda includes, Pakistan-2021 Article IV Consultation, sixth review under the Extended Fund Facility.
The arrangement, under the Extended Fund Facility, and requests for waivers of non-observance of performance criteria and re-phasing of access.
Completion of the review would make available SDR 750 million (about $1,059 million), bringing total disbursements under the EFF to about $3,027 million.
Pakistan and the IMF had reached a staff-level agreement on policies and reforms needed to complete the sixth review under the $6 billion Extended Fund Facility (EFF) and issued a press statement on November 21, 2021. The staff-level agreement is subject to approval by the Executive Board, following the implementation of prior actions, mainly on fiscal and institutional reforms.
The Board meeting was earlier scheduled for January 12, 2022; however, later removed Pakistan’s agenda from the Executive Board calendar.
The Finance Division on January 10, 2022 issued a statement saying that it has officially requested the IMF to reschedule the meeting of the Board of Directors for the approval of 6th review till end January.
“Government of Pakistan has introduced both the bills in the National Assembly and IMF has moved the 6th tranche recommendation to its board for consideration on the 12th January. As soon as the legislative procedures are completed, the IMF board will consider it for approval,” it added.
The Ministry of Finance spokesperson, Muzzammil Aslam, told Business Recorder that January 12, 2022 was earlier given as a tentative date for the Fund Executive Board meeting on Pakistan. However, the board will meet after the country has met prior conditions.
The government has passed the two critical bills including the Finance (supplementary) Bill and the State Bank of Pakistan (SBP) Amendment Bill, 2021 from the National Assembly, as the prior conditions needed for the sixth review of the $6 billion EFF to get cleared by the IMF’s executive board. The finance supplementary bill has come into force; however, the SBP amendment bill 2021 is required to be passed from the Senate.
The government has committed to the IMF that Pakistan will complete all “prior actions” before the board of directors meeting to approve the revival of $6bn EFF.
Under those prior actions, the government, through the supplementary finance bill, will make fiscal adjustment during the remaining part of the current fiscal year through a 22 per cent cut in development funds, about Rs343 billion worth of withdrawal of tax exemptions with a revised tax target of Rs6.1 trillion and increase in petroleum levy on major petroleum products by Rs4 per litre per month. The government has already increased electricity prices.
This report was first published in Business Recorder on Jan 19, 2022.