KP govt seeks clarification on certain points regarding IMF loan deal

PESHAWAR: Expressing reservations on some points of the International Monetary Fund (IMF) bailout agreement, the Khyber Pakhtunkhwa cabinet has sought clarification from the federal government, Khyber Pakhtunkhwa (KP) Adviser for Finance Muzammil Aslam on Friday.

"[Though] welcoming the IMF package’s approval, the provincial cabinet has directed to seek clarification from the centre on certain points,” he said talking to Geo News.

He said the cabinet took this decision after reviewing the IMF bailout deal.

The sought-after explanation by the federal government, the provincial official said, would then be submitted to KP Chief Minister Ali Amin Gandapur.

The development came after the Executive Board of the Washington-based lender on September 25 approved a $7 billion Extended Fund Facility (EFF) with the first tranche of $1.1 billion likely to be released by September 30.

The latest bailout, coming to Pakistan in the form of loans, follows a commitment by the government to implement reforms, including a major effort to broaden the country's tax base — a measure reflected in the tax-heavy budget passed earlier this year by the incumbent administration.

Furthermore, IMF Pakistan Mission Chief Nathan Porter has confirmed that multiple friendly nations have given "significant financing assurances" to Islamabad linked to the bailout package which goes beyond the agreement to roll over $12 billion in bilateral loans owed to these countries.

Sources in the Ministry of Finance have said that the interest rate on the loan is less than 5% and the lender might even disburse the second instalment within this fiscal year.

The key priorities, as reported by The News on Friday, under the new EFF-supported programme include:

(i) Rebuilding policy making credibility and entrenching macroeconomic sustainability through consistent implementation of sound macro policies and a broadening of the tax base;

(ii) Advancing reforms to strengthen competition and raise productivity and competitiveness;

(iii) Reforming the state-owned enterprises (SOEs) and improving public service provision and energy sector viability; and

(iv) Building climate resilience.