Aurangzeb apprises Fitch representatives about IMF deal, reform measures for stable growth

Finance Minister Muhammad Aurangzeb Monday briefed the Fitch Ratings representatives about Pakistan’s Staff-Level Agreement (SLA) with the International Monetary Fund (IMF) to support “Pakistan’s homegrown economic reform agenda” and other planned measures to boost the economy, the Finance Division said in a statement.

At a virtual meeting via Zoom, the finance minister highlighted the positive impact of the 9-month Stand By Agreement with the IMF on Pakistan’s macroeconomic indicators.

IMF, Pakistan reach staff-level agreement on $7bn Extended Fund Facility

The IMF said earlier this month that it had reached an SLA with Pakistan for a $7-billion, 37-month loan programme aimed at cementing stability and inclusive growth.

The IMF said the new Extended Fund Facility (EFF) was subject to approval by its Executive Board and obtain “timely confirmation of necessary financing assurances from Pakistan’s development and bilateral partners.”

As part of the new programme, Aurangzeb told Fitch representatives today that Pakistan aims to increase revenues by 1.5% of GDP in FY 2025 and by 3% over the next three years.

“A primary surplus of 1% of GDP will also be achieved for FY 2025,” the statement said.

The meeting was led by Fitch Ratings Senior Director Mr. Thomas Rookmaker, Directors Asia Pacific Sovereign Mr. Krisjanis Krustins and Mr. Jeremy Zook. The meeting was also attended by senior officials of the Finance Ministry.

Additionally, the minister highlighted Pakistan’s $9.4 billion foreign exchange reserves, good stock exchange performance, and 12.6% inflation in the CPI in June 2024. Aurangzeb also noted a 7.7% rise in foreign remittances.

IMF will continue to discuss policy goals and actions

Talking about the government’s fiscal reforms, the minister emphasized the efforts to broaden the tax base, citing a substantial 30% increase in tax collection during FY 2024 compared to FY 2023.

He informed Fitch Ratings that more than 150,000 retailers have registered as first-time taxpayers.

“The IT exports crossed the figure of USD 3 billion,” the statement quoted him as saying.

He reiterated the government’s commitment to further improve the tax-to-GDP ratio as part of ongoing fiscal consolidation measures.

Pakistan has met all requirements for IMF bailout deal, finance official says

“The discussions encompassed ongoing reforms in the energy sector and State-Owned Enterprises, including privatization and rightsizing federal government entities to streamline operations and improve governance,” the statement said.

According to the statement, the finance minister informed the rating agency about multilateral institutions’ confidence in financing Pakistan’s projects.

The representatives from Fitch Ratings appreciated the ambitious targets and fiscal measures adopted by the government of Pakistan and acknowledged the improvement in economic indicators.