Islamabad:
In diplomatic embarrassment for India, the Board of Directors of the International Monetary Fund approved on Friday two packages worth 2.4 billion dollars, including a new installation of $ 1.4 billion to mitigate climate challenges.
The world lender approved the second $ 1 billion loan section of prolonged funds and sanctioned a new ease of resilience and sustainability of $ 1.4 billion (RSF), the Pakistani authorities said. The IMF board of directors approved transactions by rejecting India’s unjustified objections to the financing package. New Delhi does not take into account the IMF charter tried to politicize the balance of support facilities.
The Pakistani economic team, the Minister of Finance Muhammad Aurangzeb and especially his Secretary Finance Imdad Ullah Bosal, put a lot of work to keep the program on the right track after the first setbacks. Vice-Prime Minister Ishaq Dar used his good conditions with the Pakistani peoples party to meet certain pending conditions, including the introduction of the tax laws of agriculture in Sindh and Balutchistan.
The IMF would immediately release the second loan slot of $ 1 billion under the EFC while the $ 1.3 billion would be paid over a period of the next 28 months. With the approval of the second tranche of $ 1 billion due to the best budgetary performance in Pakistan, the total disbursement under the EFF would reach $ 2.1 billion.
The tranche would once again increase the official official exchange reserves of Pakistan to $ 11 billion. The better than expected performance of foreign funds has also contributed to maintaining two -digit reserves despite major debt reimbursements.
Prime Minister Shehbaz Sharif has been satisfied with the approval of the $ 1 billion branch while denouncing the dirty tips of India to block approval.
The IMF did not grant a favor in Pakistan by approving these loans, as a member of the fund, the country has the right to seek a program. Islamabad qualified for the tranche only after having encountered difficult conditions that the IMF had established, in particular by exercising more burden on people.
The transactions were concluded after the two parties made adjustments in the 25th Extended Fund installation (EFF), including the reduction of tax objectives in absolute terms, setting a new deadline to reduce the Pakistan Sovereign Fund and open the economy to foreign companies.
India has undertaken an imprudent move to block approval despite only 2.7% of voting rights, the second defeat in less than 72 hours after losing five hunting planes against Pakistan Air Force.
The sources said that during the Board of Directors, Indian representatives tried to block approvals by arguing that Pakistan was a usual borrower. The Indian representative argued that the conceptions of the IMF programs were ineffective or that there were problems with surveillance.
However, the IMF approved the two packages on the grounds that Pakistan has successfully satisfied all the conditions established by the board of directors to qualify the second loan tranche.
Pakistan will also impose carbon tax as part of the conditions of the new $ 1.3 billion program with effect from July this year and increase the water use costs compared to next year in the context of the conditions of the new installation.
About two months ago, the IMF team had concluded an agreement at the Pakistani authorities with the first examination of the extended arrangement of 37 months under the EFF, and on a new 28 -month arrangement in the context of the resilience and the sustainability of the IMF (RSF) with total access over the 28 months of around $ 1.3 billion.
Pakistan would continue budgetary consolidation to reduce public debt while creating a space for social and development expenses and reducing private investment. Pakistan will also refrain from increasing current expenses beyond this budget, indicating that no additional subsidy can be issued.
The IMF has provided Pakistan’s economic growth for this exercise at 2.6%, but inflation rate forecasts were reduced to 5.1%. For the next exercise, the IMF sees economic growth at 3% and inflation of around 7.7%.
The IMF recognized economic stabilization but said that there was still risks for the economy of Pakistan. Among the risks are the potential risks of macroeconomic policy – caused by pressures to facilitate policies – as well as geopolitical shocks at the prices of raw materials, the tightening of global financial conditions or the increase in protectionism could undermine the hard macroeconomic stability.
The new climate installation of the IMF aims to increase climate reform efforts to reduce vulnerabilities to natural risks in the event of a disaster and strengthen climate resilience. In exchange for the loan, Pakistan is committed to strengthening public investment processes at all levels of government to prioritize projects that improve resilience to disasters, said Porter.
The government will also improve the effectiveness of the rare use of water resources, including through the price mechanisms of better prices, he added.
It will improve intergovernmental coordination on the financing of disasters; Improve information architecture and disclosure of financial and climate risks; And promoting green mobility to alleviate significant pollution and unfavorable health impacts, the IMF said.
