IMF Chief Anticipates Swift Agreement on Pakistan Loan Review: Bloomberg TV
In an exclusive interview with Bloomberg TV's Haslinda Amin on Wednesday, Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), expressed her expectation for a prompt resolution on the ongoing first review of the Stand-By Arrangement (SBA) in Pakistan, stating, "I expect an agreement on the review to come within this week."
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The remarks coincide with the presence of an IMF mission, led by Nathan Porter, currently in Pakistan for the first review of the SBA. The South Asian nation, operating under a caretaker government, avoided a sovereign debt default with the assistance of an IMF loan program approved in July. Under the $3 billion SBA, Pakistan received the first tranche of $1.2 billion from the IMF in July.
Acknowledging the challenges, Georgieva commended Pakistani authorities and the Caretaker Finance Minister for adhering to the IMF program during difficult circumstances.
She pointed out the lower tax collection as the "parental issue" for Pakistan, emphasizing the need for the tax-to-GDP ratio to increase from the current 12% to at least 15% for sustainable revenues. Georgieva urged authorities to focus on tax collection to support essential functions.
Caretaker Finance Minister Dr. Shamshad Akhtar initiated policy-level discussions with the IMF mission on Monday, attended by key officials from the State Bank (SBP), Federal Board of Revenue (FBR), Ministry of Finance, and Ministry of Energy.
While talks have progressed according to expectations, some issues arising from technical level discussions will be addressed during policy-level talks. Although FBR tax collection slightly exceeds targets at this point, questions regarding external financing may have been raised by the IMF.
Georgieva also commented on the ongoing escalation between Israel and Hamas, expressing concerns about its negative impact on the regional economy. She highlighted the devastation in Gaza's economy and the adverse effects on the economies of the West Bank and Israel. Georgieva noted an immediate rise in oil prices globally as a reflection of anxiety, emphasizing that while the current impact on the world is minimal, prolonged conflict increases the risk of dramatic consequences.
