Pakistan Finance Chief Confident of Meeting IMF Bailout Terms

Pakistan's Finance Minister Muhammad Aurangzeb has expressed confidence in the country's ability to meet the terms of its latest International Monetary Fund (IMF) bailout, which is expected to be approved by the IMF board on Wednesday. The $7 billion, 37-month program aims to stabilize the South Asian nation's economy, which has been plagued by boom-bust cycles and has secured 22 IMF bailouts since 1958.

Aurangzeb, speaking at a high-level private sector dialogue, 'CPEC-II and the Region,' in Islamabad, emphasized the government's commitment to structural reforms as part of the IMF program. He noted that the country had reached a level of macroeconomic stability, with the Karachi Interbank Offered Rate (KIBOR) coming down, and that the government was not in a hurry to borrow money.

The finance minister highlighted several key reforms that the government plans to implement to meet the IMF's conditions. These include:

1. Privatization of State-Owned Enterprises (SOEs): Aurangzeb stated that the government is committed to privatizing state-owned enterprises, including Pakistan International Airlines (PIA) and Islamabad's international airport. He mentioned that the privatization of PIA could be completed by November 2024, with the outsourcing of Islamabad's international airport also in the pipeline.
2. Broadening the Tax Base: Aurangzeb emphasized the need to broaden the tax base by increasing taxes on sectors such as agriculture, property, and retailers. He noted that the tax take has risen by 29% in the last fiscal year and is targeted to rise by a further 40% in the current fiscal year. The government aims to reduce tax exemptions and improve the quality of public expenditure by reducing distortive subsidies.
3. Energy Sector Reforms: Aurangzeb acknowledged the challenges in the power sector and the need for reforms to reduce losses and improve efficiency. He mentioned that private sector participation in the power distribution sector offers the potential for better customer service, reduced losses, improved management, increased efficiency, and new investment.



The IMF's latest bailout comes as Pakistan faces high financing needs, modest foreign exchange reserves, high debt and debt servicing costs, financial sector vulnerabilities, and a loss-making power sector that continues to weigh on public finances. Aurangzeb acknowledged the challenges but expressed optimism about the country's ability to meet the IMF's conditions and restore economic stability.

In conclusion, Pakistan's Finance Minister Muhammad Aurangzeb has expressed confidence in the country's ability to meet the terms of its latest IMF bailout. The government plans to implement several reforms, including privatization of state-owned enterprises, broadening the tax base, and energy sector reforms, to address the challenges facing the economy. With the IMF board expected to approve the $7 billion, 37-month program on Wednesday, Pakistan is poised to stabilize its economy and restore growth.