The International Monetary Fund (IMF) has temporarily suspended the approval of a second analysis of the $6-billion bailout program scheduled for next Friday due to delays in the execution of approved actions by Pakistan.
The IMF has approved the development but says its priority has now shifted to the approval of a rapid financing facility of $1.4 billion.
Pakistan and the IMF agreed that the fund’s executive board would approve the second review for the release of a third loan tranche of $450 million on April 10, subject to fulfilling all the conditions by the Pakistan government.
As per the IMF’s February 27 statement, “The (staff-level) agreement is subject to approval by the IMF management and consideration by the executive board, which is expected in early April.”
Sources told Pak Revenue that in February, Pakistan and the IMF agreed that the fund’s executive board would approve the second review for the release of a third loan tranche of $450 million on April 10, subject to fulfilling all the conditions by the Pakistan government.
According to the IMF’s February 27 statement issued to announce a staff-level agreement, “The (staff-level) agreement is subject to approval by the IMF management and consideration by the executive board, which is expected in early April.”
IMF Resident Representative Teresa Daban Sanchez said, “The priority now is to move ahead with the Rapid Financing Instrument (RFI). The IMF team and Pakistani authorities are working hard for prompt approval and disbursement.”
“The priority now is to get the RFI in motion and there will be a board meeting soon that will discuss, assess and provide guidance on next steps, “she added.
The IMF executive board concluded Article-IV consultations with Belgium, which too does not fall within the definition of COVID-19 cases.
The IMF staff returned to Washington on February 14 without reaching a staff-level deal due to disagreement over a mini-budget and an increase in electricity tariffs.
Two weeks later, the IMF staff and the Pakistani authorities reached the staff-level agreement on policies and reforms needed to complete the second review of the programme.
Last month, FBR’s acting chairperson Nausheen Javaid claimed before the Public Accounts Committee that the IMF had agreed to further reduce Pakistan’s tax collection target from Rs5.2 trillion. But the Ministry of Finance said no such agreement had been reached with the IMF.
The IMF had given a target of Rs5.503-trillion tax collection for the current fascial year. Tax authorities were able to collect only Rs3.06 trillion in the first nine months of the current fiscal year.