Pakistan swallows bitter pills to keep IMF sweet

With unprecedented policy doses within 24 hours, Pakistan on Thursday completed all the prior actions needed for staff-level agreement (SLA) with the International Monetary Fund (IMF) to avert sovereign default and secure long-delayed $1.2b disbursement.

Sources told Dawn that policy actions stood completed after the exchange rate was allowed to move freely with a massive Rs25 per dollar depreciation in two days, an unusual 300-basis-point surge in State Bank’s policy, and the government’s announcement of continuing with an almost 10 per cent increase in power rates on a permanent basis through a special surcharge, reports Dawn.

These sources said the two sides were now jointly working to finalise the text of the Memorandum of Economic and Financial Policy (MEFP) and targets for the programme implementation that could be presented to the IMF’s executive board for approval.

This would involve the programme monitoring tools like performance criteria, indicative targets, and other similar reporting benchmarks for agreed upon macroeconomic framework.

The IMF mission is reported to have now promised to move the case to the executive board “in the most agile fashion possible” against a normal process of about six weeks.