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IMF’S $6bn loan for Pakistan, but with tough riders

NEW DELHI: Pakistan reached an agreement with the International Monetary Fund (IMF) on Tuesday for a $6 billion loan over three years. The agreement is subject to approval from the IMF management and the executive board, as also to timely implementation of prior actions and confirmation of international partners’ financial commitments.

The agreement aims to help Pakistan improve management of public enterprises, strengthening institutions and governance, continuing antimoney laundering efforts & combating the financing of terrorism efforts, besides creating a more favourable business environment, and facilitating trade.

The authorities will engage provincial governments on exploring options to rebalance current arrangements in the context of the forthcoming National Financial Commission.

The forthcoming budget for FY 2019-20 is a first critical step in the authorities’ fiscal strategy. The budget will aim for a primary deficit of 0.6% of GDP supported by tax policy revenue mobilisation measures to eliminate exemptions, curtail special treatments, and improve tax administration. This will be accompanied by prudent spending growth aimed at preserving essential development spending, scaling up the Benazir Income Support Programme and improve targeted subsidies.

The State Bank of Pakistan will focus on reducing inflation and safeguard financial stability. A market-determined exchange rate will help the functioning of the financial sector and contribute to a better The State Bank of Pakistan (Central bank). The authorities are committed to strengthening the State Bank of Pakistan’s operational independence and mandate.

Source: IMF

News credit : Indiatimes