Board Meeting Scheduled for December 7 to Approve IMF Staff-Level Agreement
ISLAMABAD: The Executive Board of the International Monetary Fund (IMF) is tentatively scheduled for December 7 to approve the Staff-Level Agreement (SLA) with Pakistan for the first review of the $3 billion Stand-By Arrangement (SBA), leading to the disbursement of about $700 million on December 8.
The SLA between the IMF staff and Pakistani authorities was reached on November 15 in Islamabad, paving the way for Pakistan to access SDR 528 million (around $700 million). This will bring total disbursements under the nine-month $3 billion SBA to almost $1.9 billion.
Caretaker Finance Minister Dr. Shamshad Akhtar announced the shelving of a $1.5 billion Eurobond launch a day later due to adverse global financial conditions. The minister committed to regularly adjusting electricity and gas rates to prevent further growth of circular debt.
The IMF mission had urged authorities to return to a market-determined exchange rate, highlighting risks from geopolitical tensions, rising commodity prices, and difficult global financial conditions. The mission advised the authorities to continue efforts to build resilience.
The quarterly review with the IMF remained smooth, and the SLA was announced immediately after most quantitative targets were met. Talks took place over almost two weeks (November 2-15) in Islamabad, and the SBA was signed in July with an upfront disbursement of about $1.2 billion.
The IMF agreement supports Pakistan’s commitment to advancing fiscal consolidation, implementing cost-reducing reforms in the energy sector, returning to a market-determined exchange rate, and pursuing reforms in state-owned enterprises and governance to attract investment and support job creation while strengthening social assistance.
The IMF noted that a nascent recovery was underway, supported by international partners’ assistance and improved confidence. The execution of the FY24 budget, continued energy price adjustments, and renewed flows into the foreign exchange market have reduced fiscal and external pressures.
While inflation is expected to decelerate, Pakistan remains susceptible to significant external risks, including geopolitical tensions, commodity price increases, and global financial tightening, according to the IMF. Macroeconomic sustainability and creating conditions for balanced growth remain key priorities under the SBA, with an emphasis on fiscal consolidation to reduce public debt while protecting development needs.
The IMF appreciated the authorities’ determination to achieve a primary surplus of at least 0.4% of GDP in FY24, supported by spending restraint and improved revenue performance. Further reforms to reduce costs in the energy sector and restore its viability were also agreed upon, including power tariff adjustments and increased gas prices.
The IMF insisted on returning to a market-determined exchange rate promptly and rebuilding foreign exchange reserves. While acknowledging that regulatory and law enforcement measures helped normalize import and FX payments, the IMF stressed that the rupee must remain market-determined to sustainably alleviate external pressures and rebuild reserves.
