IMF’s pact with Pakistan provides it much needed short-term cover to tackle with situation after upcoming elections: Ex-governor SBP Murtaza Syed

ISLAMABAD, July 1 (SABAH): International Monetary Fund (IMF) reached a staff-level pact with Pakistan on a $3 billion stand-by arrangement which is a decision long awaited by Pakistan which has been on the brink of default.

Former deputy governor of the State Bank of Pakistan Murtaza Syed has commented that the SBA (stand-by arrangement) provides Pakistan with much needed short-term cover, in the lead up to and immediate aftermath of the upcoming elections. As long as Pakistan remains on track under the SBA’s reviews, it should catalyze additional financing from bilateral and other multilateral sources, he added.

He said, “In this way, we should be able to meet the external debt repayments coming due in the next few months. It is not the end of our relationship with the IMF though, as the SBA is a short-term bridging operation.”

He went on to say that the new government will almost definitely need to negotiate another long-term EFF programme with the IMF after the elections, as our balance of payments and external debt repayment problems are of a more protracted nature.

According to economy experts, this pact will further exacerbate the current state of inflation in the country. Though it is a fact that the deal offers some respite to Pakistan, which is battling an acute balance of payments crisis and falling foreign exchange reserves. In response, Pakistan would have bring economic reforms as electricity price may goes up to Rs 8 per unit or more than this. Same is the case with the price of gas. Pakistan would have to increase exports as well. The government cannot give further relief of taxes to the people though it could easily obtain loans and fundings.