The International Monetary Fund Mission has returned to Washington without reaching a staff deal with Pakistan on the release of over $ 1 billion loan tranches, but it said “significant progress” was made during the conversations to strike an agreement.

A day after the end of the first review interviews, the IMF issued a press release that recognized “strong implementation” on the program. But it remained shortly after announcing the staff level agreement, which is critical for maintaining financial stability in Pakistan.

One of the reasons for not announcing the agreement was that the IMF handed the first draft of the Memorandum of Economic and Economic Policies (MEFP) to Pakistan just before its departure to Washington, Senior Finance Minister officials said. They stated that the agreement would be achieved very soon when a consensus is obtained at MEFP.

MEFP is a political document that defines the basis for collaboration during the program period, and it is revised after the end of each review program.

The IMF mission manager Nathan Porter announced through a news statement that “the mission and authorities will continue political discussions practically to end these discussions in the coming days”.

Without the staff’s level agreement, the IMF management cannot take Pakistan’s case to the Board of Directors for the approval and completion of the first review and payment of the second loan trafficking of over $ 1 billion.

“The IMF and the Pakistani authorities made significant progress towards reaching a staff agreement (SLA) about the first review during the 37-month extended scheme under the extended fund facility (EFF), said Nathan Porter, IMF Mission Chief.

The smooth continuation of the program is critical of uninterrupted rollovers of the foreign debts with four bilateral creditors, Saudi -Arabia, the United Arab Emirates, China and Kuwait.

On Saturday, the Ministry of Finance gave a detailed briefing to Prime Minister Shehbaz Sharif about the results of review interview, according to government sources. They said the prime minister was assessed on progress and the new proposed structural benchmarks by the IMF.

Pakistan and the IMF negotiations were held from 3 to 14 March. Prior to the EFF mission, the IMF also held meetings for the $ 1.3 billion worth the resilience and sustainability facility (RSF) – the 26th lending package that Islamabad searches for climate change -related expenses.

The Ministry of Finance’s officials still hoped that the staff level agreement will be reached in the next two to three weeks. They said the IMF did not have major problems in the implementation of the program. However, they added that both sides still adjusted fiscal policy and the related power sector -related goals.

It took the IMF and Pakistan almost three months to reach a staff agreement for the $ 25 billion 25. The IMF package last year. The negotiations were ended without an agreement on May 23 last year, but the agreement was reached on July 12 after approval by the Board of Directors in September.

The Ministry of Finance’s officials said most of the discussions have taken place.

Strong implementation

The IMF recognized progress in the implementation of key reforms.

“The program implementation has been strong and the discussions have made significant progress in several areas,” Porter said.

The mission manager added that progress was made with the planned fiscal consolidation to durable to reduce public debt, maintenance of sufficiently tight monetary policy to maintain low inflation, acceleration of cost -reducing reforms to improve the viability of the energy sector and implement Pakistan’s structural reform agenda to speed up growth.

He said the discussions were also held to strengthen social protection and rebuild health and education expenses.

The sources said that during the conversations, the IMF emphasized a stable path to economic growth and avoided any new sprint that can cause a balance of payments.

The sources said the IMF has projected 2.8% financial growth rate for the next financial year, which is slightly lower than the government’s downward revised projection of 3.1%. The budget target for economic growth is 3.6%.

The government made progress on fiscal policy, but it could not take on the structural reforms, said Miftah Ismail, former finance minister.

The provincial governments introduced the legislation on agricultural income tax with a delay, but the implementation has not yet begun, which is a breach of the program. Likewise, the government has not changed the SOVEREIGN WEALTH Fund Act, and it also implemented the condition of turning the gas into the captivity power plants that are not affordable with a delay.

The Ministry of Finance met the conditions of the primary budget surplus and increased the debt maturation period. But the federal income council could not reach its tax goals, and the Tajir Dost scheme also failed badly.

The central bank reached its goals, and it also committed with the IMF to keep the monetary policy tight, the sources said. The IMF raised some concerns about the stiffness of the exchange rate regime, but no major change in the path is expected, the sources said.

RSF loans

Nathan Porter said that “Progress is also made in discussions about the authorities’ climate reform agenda aimed at reducing vulnerabilities from natural disasters -related risks and accompanying reforms that could be supported under a possible arrangement under the resilience and sustainability facility (RSF).

Pakistan is looking for 1 billion SDR or $ 1.32 billion new loans to clear climate change. The IMF has proposed 13 conditions for the new loan, including turning carbon tax on oil products and internal combustion motor cars.