State Bank of Pakistan (SBP) Governor Jameel Ahmed expressed confidence on Thursday that Pakistan and the International Monetary Fund (IMF) will soon finalize a staff-level agreement (SLA). Speaking after a Public Accounts Committee (PAC) meeting at the Parliament House, Ahmed responded to media questions about the anticipated timeline for concluding the SLA discussions between Pakistan and the IMF.
While he voiced optimism, neither the SBP governor nor the Secretary of the Ministry of Finance, Imdadullah Bosal, provided a specific timeframe for when the agreement would be signed. However, Governor Ahmed did note that virtual meetings between Pakistan’s government officials and the IMF would continue as part of ongoing policy discussions.
Ahmed’s remarks come amid increasing attention on Pakistan’s negotiations with the IMF, as the country seeks to secure much-needed financial support to stabilize its economy and address pressing fiscal challenges. The finalization of the staff-level agreement is seen as a crucial step toward unlocking further IMF assistance under the extended loan facility.
Alongside updates on the IMF discussions, Governor Ahmed provided insights into Pakistan’s economic outlook for the current fiscal year. He announced that the country’s remittance target has been revised upward to $36 billion. This is a positive development, given the role remittances play in bolstering Pakistan’s foreign exchange reserves. Additionally, Ahmed projected the country’s GDP growth to range between 2.5% and 3.5%, reflecting cautious optimism amidst global economic uncertainties and domestic challenges.
Regarding Pakistan’s fiscal health, Ahmed indicated that the target for the current account deficit has been reduced. Inflation is expected to remain around 7% for the fiscal year, signaling some level of price stability despite persistent challenges in the domestic and global markets.
During the committee meeting, the SBP governor also explained how exchange rate assessments are carried out by the SBP. According to Ahmed, the central bank provides assessments to the Finance Division based on the exchange rate prevailing at the start of the financial year. However, he highlighted that multiple variables—including inflation, petroleum prices, and market sentiment—affect the exchange rate throughout the year, which can lead to fluctuations. These factors underscore the complexity of managing currency stability in an environment marked by external shocks and domestic policy adjustments.
Imdadullah Bosal, Secretary of the Ministry of Finance, clarified that the exchange rate is typically determined when the federal budget is presented. However, he emphasized that it is reviewed periodically—either quarterly or biannually—through consultations between the Ministry of Finance and the SBP to ensure that it remains aligned with economic conditions.
The PAC meeting also delved into an audit objection concerning the payment of honoraria to officers and staff involved in the annual budget exercise, which had occurred without an approved policy. In response, Bosal stated that the Finance Ministry would present a new honoraria policy to the Cabinet. The proposed policy would apply to employees across 50-60 government entities, including those from the Federal Board of Revenue (FBR). Under the new system, 45% of employees in relevant departments would be eligible to receive four types of honoraria: performance-based, additional, special, and one other type. PAC members expressed concerns about the rationale for honoraria payments, particularly given the existing overtime payment policy for government employees.
In conclusion, while optimism regarding the IMF agreement remains high, challenges persist for Pakistan’s economy. As the country navigates these complex issues, the government’s efforts to stabilize fiscal policy and manage inflation, exchange rates, and remittances will play a pivotal role in shaping Pakistan’s financial trajectory in the months ahead.