ISLAMABAD – Pakistan and the International Monetary Fund (IMF) have come to an agreement on a fiscal framework, which is another step towards the release of a loan tranche that has been held up. This is important because Pakistan, a country with over 220 million people, is close to defaulting on its debt.
The good news comes as the coalition government is taking important steps suggested by the international lender and putting in place taxes to raise Rs170 billion.
With strict rules in place, it is likely that the two sides will reach a staff-level agreement by the end of this month. On Thursday, it was said that Islamabad and a US-based lender met virtually and agreed on how to negotiate.
The recent change comes at a time when the markets are uncertain because a visiting mission from a financial institution ended its trip to Pakistan without coming to an agreement at the staff level.
Several members of the ruling alliance, including the country’s finance minister Ishaq Dar, put their hopes on the talks going on with the IMF and were hopeful that things would get better.
Nathan Porter, the head of the mission for the International Monetary Fund (IMF), also made a statement confirming that the talks on policy measures had made a lot of progress. He also thanked the officials for the “productive talks.”
The head of the IMF mission said that the “key priorities” include “strengthening the fiscal position with permanent revenue measures and reducing untargeted subsidies, while scaling up social protection to help the most vulnerable and those affected by the floods; allowing the exchange rate to be set by the market to gradually get rid of the foreign exchange shortage; and improving energy provision by preventing more circular debt from building up and making sure the v
