The suspended Extended Fund Facility (EFF) has been revived on Monday (today) after a staff level agreement between Pakistan and International Monetary Fund (IMF) was finalized.
The official statement from IMF read “The Pakistani authorities and IMF staff have reached a staff-level agreement on policies and reforms needed to complete the sixth review under the EFF.”
However, the final nod will be given by the executive board of IMF as the statement further mentions “The agreement is subject to approval by the Executive Board, following the implementation of prior actions, notably on fiscal and institutional reforms.”
Pakistan received financial disbursement by IMF in April to counter the unusual circumstances created due to Covid-19. But since then there was a deadlock between the two parties.
IMF acknowledged that Pakistan has tried to continuously improve the overall financial structure.
Pakistan was appreciated by IMF as the Federal Board of Revenue (FBR) tax collection was termed “strong”.
Also Read: Deadlock between Pakistan and IMF loosen up
However, the statement further read that inflation is on the rising side but that too will be brought under control after the rupee depreciation comes to a halt.
Pakistan has been told by International Monetary Fund to work more on its tax reforms. And try to abolish tax exemptions as soon as possible so that the government has resources available which can be allocated to the right areas.
“As economic stability becomes entrenched and the independence of the SBP is strengthened with the approval of the SBP Act Amendments, the central bank should gradually advance the preparatory work to formally adopt an inflation targeting (IT) regime in the medium term, underpinned by a forward-looking and interest-rate-focused operational framework,” read the statement.
IMF also mentioned that Pakistan has made a notable difference and betterment in curbing money laundering.
As per financial experts, it is expected that the loan agreement revival will help Pakistan in stabilizing its economy.
Inflation will also begin to witness a downtrend after the rupee depreciation comes to a pause.