The sum is the final tranche of a $3 billion rescue-package Islamabad had secured last summer. The newly-elected administration of the South Asian cash-strapped country is already seeking another IMF loan. The International Monetary Fund initially approved on Wednesday the disbursement of $1.1 billion (approximately €1 billion) for indebted Pakistan, pending a final board approval. The sum constitutes the final tranche of a $3 billion rescue package which Pakistan had secured last summer. The package helped the South Asian country avert sovereign debt default. What do we know about the agreement? The staff-level agreement is due to be reviewed by the board in April, the IMF said. It follows a five-day IMF mission in Pakistan to review the fiscal consolidation benchmarks set for the loan. "Pakistan's economic and financial position has improved in the months since the first review, with growth and confidence continuing to recover on the back of prudent policy management and the resumption of inflows from multilateral and bilateral partners," the IMF said. However, the fund expected modest growth this year, with inflation still well above target. It stressed that Islamabad still needed more policy reforms to address its "economic vulnerabilities." Pakistan had already met several IMF conditions before the stand-by arrangement. They included a budget revision, an interest rate hike and an increase in taxes, electricity and gas prices to generate revenues. The IMF called for broadening the tax base and adjusting power and gas tariffs. Pakistan seeking new bailout Meanwhile, Islamabad has already started seeking a new long-term bailout from the fund. Newly appointed Finance Minister Muhammad Aurangzeb announced the plans, without officially stating the size of the loan. In its Wednesday statement, the IMF said discussions around such a loan would start in the coming months. However, it said objectives would include strengthening public finances, restoring the energy sector's viability, returning inflation to target and promoting private-led activity. The newly-elected government blames its economic woes on the previous government of Imran Khan.Pakistan: How the Supreme Court thwarted a 'civilian coup' Khan was arrested and faced with a slew of charges since a no-confidence vote in parliament ousted him in 2022. He was thus prevented from competing in the country's elections last month.

The government has deferred its plans to issue a $1.5 billion international bond, Caretaker Finance Minister Shamshad Akhtar said on Thursday, stressing that the country will have to go for more IMF loan programmes for some time as the economy remains fragile. Her remarks came a day after the government reached a staff-level agreement with the International Monetary Fund on a nine-month bailout package. During a press briefing, Dr Akhtar outlined key aspects of the IMF agreement, affirming the government’s commitment to regular tariff adjustments, including a planned gas price hike in January to prevent the accumulation of circular debt in both the gas and power sectors. The electricity and gas rates would be “continuously revised” and their costs controlled besides transferring their management to the private sector as soon as possible and institutionalising ongoing campaign against power and gas theft, she said. She said Pakistan would also need to adhere to the market-determined exchange rate completely, remain responsive through adequate monetary policy adjustment, particularly to core inflation, and bring four more state-owned enterprises in line with the financing and governance template of the newly approved SOE law. These four state firms include the National Highway Authority (NHA), the Pakistan National Shipp¬ing Corporation (PNSC), the Pakistan Broadcasting Corporation (PBC), and the Pakistan Post.  Dr Akhtar also tried to allay concerns regarding the external financing gap, expressed confidence over the achievement of the tax collection target and said the government would remain committed to fiscal consolidation for macroeconomic stability and balanced growth. She said that unlike in the past, no prior action was required by the IMF management this time before approving the staff-level agreement, taking total releases under the $3bn programme to $1.9bn and leaving $1.1bn for the next and final review. Addressing the postponement of the new international bond, Dr Akhtar cited high interest rates and costly market conditions as key factors. “I have decided to postpone the new (international) bond. It is going to be expensive. Interest rates are very high. So, we cannot go to the international market,” she said, adding that the government would repay the $1bn bond that would be maturing in April next year. She said the government was working on some other avenues. In her view, the staff-level agreement would enable approvals of $1bn in loans from the World Bank ($350m), the Asian Development Bank ($350m) and the Asian Infrastructure Investment Bank (250m). Finance Secretary Imdadullah Bosal said these agreements were already “at an advanced stage” and were pending for the IMF’s staff-level agreement. He said negotiations with lenders for more funds under social protection, flood resilience and women’s inclusiveness programmes were also in the final stages. He, however, evaded the overall external financing needs, and the availability and gap for the current year, saying these were “dynamic numbers” despite budget allocations or announcements by the Economic Affairs Division. Mr Bosal said talks with some other commercial entities were also at an advanced stage to materialise $3.5bn projected commercial inflows. This would help launch a new international instrument — the Environment, Social and Governance (ESG) bond — rather than conventional bonds. He said the current account deficit would be lower than budgeted. Finance Minister Akhtar hoped to ensure a $2bn disbursement from the World Bank alone during the current fiscal year. “We are quite comfortable with external accounts,” she insisted, hoping that the IMF’s staff-level agreement, followed by disbursements from other multilaterals, would improve Pakistan’s credit rating. “The next [IMF] programme is very necessary for some time” as the economy had returned to stability that was still very fragile, the minister said. “Until we are able to increase exports and domestic resources, we will need another programme” because there was no more refuge from doing long-standing reforms. “The country will not survive without this,” she said. “Probably, we will have to go into another EFF [Extended Fund Facility]. We will remain engaged with the IMF,” she said but hastened to add that this may be premature to talk about. Dr Akhtar said her priority was to immediately start working on the last $1.1bn tranche under the current facility so that the new government should not face any difficulty, but “if we get time, we will also discuss this [new programme] as well. Responding to a question, she said the government would have to fast-track reforms in the SOEs to help improve business climate. There was no prior action, but laws governing the four SOEs — NHA, Pakistan Post, PBC and PNSC — have to be made compatible with the SOE law by Nov 30. Responding to another question, she said the government expected about Rs35bn in additional revenue through a windfall tax on banks on their massive foreign exchange earnings, “provided they pay” — an indication the government expected legal challenges from powerful banks. To another question, she said it had yet to be decided as to how much additional taxes would be imposed on retailers and real estate based on the expectation that the FBR would be able to deliver the Rs9.4 trillion revenue collection target. However, she agreed that the talks with the IMF also included trigger points to consider such options. Source: DAWN

US ‘Brokered’ Pakistani Weapons Transfer to Ukraine In Lieu Of IMF Bailout – American Media ClaimsAn investigation by the American nonprofit news organization, The Intercept, has revealed how Washington brokered a deal by which secret Pakistani arms sales to the US helped to facilitate a controversial bailout from the International Monetary Fund. Although numerous reports have pointed out that Pakistan has been supplying weapons to Ukraine, these were dismissed as false reports, with neither the Pakistani nor Ukrainian side responding to queries. The revelations, “U.S. Helped Pakistan Get IMF Bailout with Secret Arms Deal for Ukraine,” on September 17, 2023, exposed a devious design more sinister than could have been imagined with the complete involvement of the United States in a ‘Bombs for Bailouts’ plan offered to Pakistan. With access to secret documents and insiders, The Intercept broke the story about a brokered deal that allowed Pakistan’s military to postpone elections, deepen a brutal crackdown, and jail former Prime Minister Imran Khan. Once Khan was ousted and the Pakistan military was at the helm, Islamabad emerged as a supporter of the US and its allies in the Ukraine war. Pakistan was then rewarded with an IMF loan. Backhand Deal Entered In Secret According to the in-depth report, a month before a June 30 deadline for the IMF’s review of a planned billion-dollar payment, Pakistani Ambassador to the US Masood Khan sat down with Assistant Secretary of State Donald Lu at the State Department in Washington, D.C. on May 23, for a meeting about how Pakistani arms sales to Ukraine could shore up its financial position in the eyes of the IMF. The Intercept says, “Lu told Khan at the May 23 meeting that the US had cleared payment for the Pakistani munitions production and would tell the IMF confidentially about the program.” On June 29, a day before the original IMF program expires, the IMF announced that instead of extending the previous series of loans, the bank would enter a “Stand-By Arrangement” — with fewer strings attached, more favorable terms, and valued at US$ 3 billion. A source within the Pakistani military leaked papers and emails to The Intercept about the arms transactions to buy Pakistani military weapons for Ukraine, with US officials including American and Pakistani contracts. As part of this arrangement, even the UK’s Ministry of Defence entered a deal with the Pakistan Ordnance Board to supply arms to Ukraine. Slew Of Arms Reach Ukraine From Pakistan As Ukraine grappled with shortages of munitions and hardware, the presence of Pakistani-produced shells and other ordinances by the Ukrainian military has surfaced in open-source news reports about the conflict. However, neither the US nor the Pakistanis have acknowledged the arrangement. Headquartered in Wah Cantt, Punjab, Pakistan, the Pakistan Ordnance Factories (POF) have provided a range of arms and ammunition to the Ukrainian Military. These include: 122mm Yarmuk HE-Frag rockets, 122mm howitzer shells, 155mm artillery shells, M4A2 propelling bag charges, M82 primers, PDM fuses, M44A2 120mm HE mortar bombs, 130mm shells, 40mm RPG7 HEAT ammo, 12.7×99 MM armor-piercing cartridges, 12.7×108 mm bullets, and 7.62×54mm bullets Since Washington brokered the deal, Pakistan has stepped up military supplies to Ukraine via a German port, simultaneously with the Poland route, to transfer rockets for use in multi-barrel rockets. Quid Pro Quo Will Be Military Helicopter Parts To Pakistan As an acknowledgment of Islamabad’s help, Ukraine will supply spare parts for Mi-17 helicopters to Pakistan. The spare parts and helicopter engine, worth US$1.5 million, will be provided by the Ukrainian company Motor Sich JSC to Pakistan. Of course, the quality of Pakistani weapons is another matter. Ukrainian military leaders have reportedly expressed dissatisfaction with the quality of rockets supplied by Pakistan. There are reports of Pakistani ammunition causing injuries to Ukrainian soldiers. Zelensky’s commanders from the 17th Tank Battalion are complaining about the poor-quality rockets. The commander in Bakhmut of Ukraine’s eastern region said the missiles from Pakistan are “not of a good quality.” Meanwhile, as increasing reports of Pakistani supplies of weapons to Ukraine surfaced, Ukrainian Deputy Foreign Minister Emine Dzhaparova visited India in April 2023. She tried to assure New Delhi that Ukraine, for many years, “has had military contracts with Pakistan” and that Kyiv’s relations with Islamabad are not targeted against India More recently, Ukraine and Pakistan have come out in the open about reports claiming Pakistan supplied weapons to Kyiv amid war with Russia. On July 20, Pakistani Foreign Minister Bilawal Bhutto Zardari and Ukrainian Foreign Minister Dmytro Kuleba held a joint press conference where they agreed to reinvigorate their bilateral agreements. A planned ‘Ukrainian-Pakistani Commission on Economic Cooperation’ will likely be inaugurated soon. Pakistan is set to supply fresh arms consignments as Ukraine faces a depleting Western weapons stockpile amid a ‘failed counter-offensive’ against Russia. According to a report in the Economic Times, close on the heels of the Ukrainian foreign minister’s visit, Islamabad has approached a Gulf state for shipping the next consignment of arms to Kyiv via Poland. Pakistani shipping firm Project Shipping contacted a shipping firm in the Gulf to identify vessels bearing US flags to ship cargo of 150 containers of 25mm cartridges to Ukraine. Pakistan Sets Up Firm In Warsaw For Ukraine Arms Pakistan defense trading firm Kestral Trading has established a firm in Warsaw, under the name ‘Balferrten Investments’ to take care of the logistics of supplies to Ukraine. But even as Pakistan is said to supply weapons to Ukraine to make profits constantly, Russian President Vladimir has signed a memorandum to develop Afghanistan’s thermal coal power sector. While Pakistan was already expected to be part of the energy deal with Russia and Iran, including Afghanistan is likely to irk Islamabad given the current tussle between Islamabad and Kabul over border issues. When it comes to doing business with the West during the war, Pakistan has again found its ground in the Ukraine war, just as it did almost four decades ago during the Afghan war and after 9/11. At the start of the war in February 2022, Pakistan sent military and humanitarian assistance to bolster Kyiv’s ground forces. Now that these reports of brokered deals over the IMF bailout surface, it would not be far-fetched to reflect that Pakistan was removed from the FATF grey list when it began supplying weapons and other aid to Ukraine at the bidding of the West. Discredited for being a terror state, Pakistan is now using the Ukraine war to regain its favored status as a faithful ally of the West.

It seems that the euphoria over the International Monetary Fund (IMF) Stand-By Arrangement of $3 billion fizzled out as the dollar appreciated despite a significant improvement in inflows. The State Bank of Pakistan (SBP) reported the closing price of the dollar on Friday at Rs277.59 in the interbank, showing an appreciation of Rs1.13 from the previous day’s closing. The inflows from the IMF, Saudi Arabia and the United Arab Emirates had changed the sentiments during the early days of this week but the dollar’s appreciation on Friday indicated return of dollar domination. The foreign exchange reserves of the SBP increased by $4.2bn due to new inflows, making the total reserves of the country as $8.7bn. The improvement, which provided strength to the local currency for few days, could not last even a week. The government’s commitment with the IMF for free exchange rate was felt in the market. In the open market, the dollar traded Rs1.50 higher than the previous day. Exchange companies reported that the dollar closed at Rs281, but they maintained that the trading was thin due to lack of demand. Source: dawn.com

After announcing the bailout package for Pakistan, the International Monetary Fund (IMF) conveyed its concerns regarding the poor past record of Pakistan and advised the country to complete the new programme to reduce the trust deficit, Pakistan-based The Express Tribune reported.  The IMF Executive Director Bahador Bijani on behalf of the board has conveyed the message to Pakistan's Finance Minister Ishaq Dar through a virtual contact on Thursday, The Express Tribune reported citing highly-placed sources.  The global lender conveyed the concern a day after the IMF board approved the USD 3 billion Stand-By Arrangement (SBA) programme for Pakistan.  Bahador Bijani is one of the 24 executive directors on the IMF board. According to the sources, the IMF board had asked Bijani to convey the tough message to Pakistan, The Express Tribune reported.  During the board meeting, the IMF directors raised serious concerns regarding Pakistan's poor track record in implementing reforms and fulfilling commitments made to the IMF board and the management, the sources said, according to The Express Tribune.  According to sources, Bijani conveyed IMF board concerns to Dar so that there was no complacency in Pakistan following the approval of the new programme, the report said.  On Friday, Pakistan Prime Minister Shehbaz Sharif held a telephonic conversation with IMF Managing Director Kristalina Georgieva and assured her that Islamabad was serious this time to bridge the trust deficit.  According to the statement released by Pakistan Prime Minister's office, Georgieva said that "the IMF board was sceptical about Pakistan’s commitment to fulfilling the conditions of agreement due to the past trust deficit." However, she assured the board that Pakistan will deliver on its commitments as she had met Pakistan PM and seen his seriousness, according to the statement.  The IMF had last discussed Pakistan's case in August 2022 and was scheduled to hold a meeting in November 2022 to approve the ninth review, according to The Express Tribune report. However, Pakistan's case was not discussed until June when the board informally met to decide whether they should give it a chance to Pakistan despite its poor track record.  On June 30, the IMF announced a staff-level agreement with Pakistan which the board approved this week.  According to sources, the IMF board has communicated to Pakistan that this was the last chance for Pakistan to improve its poor standing.  The IMF board asked Pakistan to implement the new programme and further stated that they will no longer give any concession.  The IMF board also advised Pakistan to complete the ongoing programme so that the trust deficit between both sides was minimised.  On Thursday, the IMF’s Director of Strategic Communications Julie Kozack said that"steadfast implementation" of the nine-month Stand-by Arrangement (SBA) was critical for Pakistan’s future.  In a statement, Julie Kozack said,"Steadfast implementation is critical to address its large financing needs and support the most vulnerable, according to The Express Tribune. The communications director said that resolving Pakistan's structural challenges will likely need continued reforms over the medium term to carry out economic transformations for strengthening the growth prospects and creating a conducive environment to renewed private capital inflows.  The board members were also critical of Pakistan's lack of consistency in reforms and its failure to honour its commitments, according to The Express Tribune report.  This is the 23rd programme that has been signed between Pakistan and IMF.  However, only one programme has been fully implemented that too due to the support of a series of waivers against key conditions.  Although Pakistan has so far shown the resolve to implement the current programme, however, it might prove challenging for Islamabad due to the involvement of three governments from now till the expiry of the programme in March next year.   On Wednesday, the International Monetary Fund (IMF) approved a 9-month Stand-By arrangement for Pakistan to support the country's economic stabilization program, Pakistan-based Geo News reported. IMF in a statement said, "Today, the Executive Board of the International Monetary Fund (IMF) approved a 9-month Stand-By Arrangement (SBA) for Pakistan for an amount of SDR 2,250 million (about USD 3 billion, or 111 percent of quota) to support the authorities’ economic stabilization program." 

A day after approving the $3 billion bailout package, the International Monetary Fund (IMF) board has conveyed its concerns about Pakistan’s past poor record and advised it to complete the new programme to reduce the trust deficit. On Friday, Prime Minister Shehbaz Sharif also had a telephonic conversation with IMF Managing Director Kristalina Georgieva and assured her that Islamabad was serious this time to bridge the trust deficit. Highly-placed sources told The Express Tribune that on behalf of the board, the IMF Executive Director Bahador Bijani, communicated the message to Finance Minister Ishaq Dar through a virtual contact. The contact was made on Thursday – a day after the IMF board approved the $3 billion Stand-By Arrangement (SBA) programme. Bijani is one of the 24 executive directors on the IMF board and represents the constituencies of Algeria, Ghana, Iran, Libya, Morocco, Pakistan and Tunisia. The sources said that the board had asked Bijani to convey the tough message to Pakistan. During the board meeting, the directors had expressed their serious concerns about Pakistan’s poor track record in implementing reforms and fulfilling commitments made to the IMF board and the management during the previous programme period, the sources said. The $6.5 billion Extended Fund Facility could not be completed and the programme expired on June 30th with $2.6 billion remaining undisbursed. The sources said that Bijani communicated the board’s sentiments to Dar so that there was no complacency in Islamabad after the approval of the new programme for the period of nine months. The finance ministry did not officially commented. No statement was issued after Dar-Bijani meeting. A handout issued by the Prime Minister’s Office stated that Georgieva said that “the IMF board was sceptical about Pakistan’s commitment to fulfilling the conditions of agreement due to the past trust deficit”. However, “in the light of her continued engagement with the prime minister, she assured the board that Pakistan will deliver on its commitments as she had personally met the prime minister and seen his seriousness to deliver”. It added. She acknowledged the leadership shown by the prime minister. The IMF board had last discussed Pakistan’s case in August 2022 and was scheduled to meet again in November 2022 to approve the ninth review. But Pakistan’s case was never discussed until last month when the board informally met to decide whether it should still give another chance to Pakistan despite its poor track record. During the informal meeting on June 28th, the board decided to remain engaged with Pakistan. Subsequently, the IMF announced a staff-level agreement with Pakistan on June 30th, which the board approved on Wednesday. The sources said that Pakistan was conveyed by the IMF board that this was the last chance for Pakistan to improve its poor standing. The board urged Pakistan to implement the new programme and that it would no longer give any concession. They added that Pakistan had been advised to complete the ongoing programme so that the trust deficit between both sides was minimised. The IMF’s Director of Strategic Communications Julie Kozack also said on Thursday that “steadfast implementation” of the nine-month Stand-by Arrangement (SBA) was critical to Pakistan’s future”. “Steadfast implementation is critical to address its large financing needs and support the most vulnerable”, she said in a statement on Thursday. The communications director emphasised that resolving Pakistan’s structural challenges would likely require continued reforms over the medium-term to underpin the needed economic transformations to strengthen inclusive growth prospects and to create an environment conducive to renewed private capital inflows. The board members were also critical of Pakistan’s lack of consistency in reforms and its failure to honour its commitments. It is the 23rd programme that Pakistan signed with the IMF. So far, only one programme (2013-16) could be fully implemented that’s too on the back of a host of waivers against key conditions. The Pakistani authorities have, so far, shown the resolve to implement the current programme, although it might prove challenging due to involvement of three different governments from now till the expiry of the programme in March next year. “The prime minister reassured that he will not tolerate an iota of violation of this agreement”, according to the press statement. “This government is here till August after which an interim government will take over and he is confident that they will continue to fulfil the obligations”, said prime minister, while addressing the IMF’s concerns about possibility of any slippages. The prime minister stated that after elections, if the people of Pakistan re-elected his government, he was committed to turn over the economy with the help of the IMF and the development partners. The finance ministry officials said that the new programme was implementable, as no harsh prior conditions were attached with the next two reviews. They added that it was also in the interest of Pakistan that the trust deficit with the IMF board is minimised. “For us, it is a matter of satisfaction that despite the concerns expressed by the board, no board member voted against the $3 billion programme,” a senior finance ministry official said. However, India had bitterly criticised Pakistan’s poor track record and its inability to honour the commitment and at the end it abstained from the voting. The sources said that the IMF would now closely watch the performance of the Federal Board of Revenue (FBR), the energy ministry and the finance ministry’s ability to deliver on the budget targets. The IMF would also ensure that Pakistan did not interfere in the exchange market and the interest rates were in line with the future inflation outlook. The prime minister appreciated Georgieva for her positive approach and her frank comments during the prime minister’s interaction with her in Paris. Referring to Pakistan’s best quality mangos, the prime minister said it would be an honour to send a gift of Pakistani mangos to the managing director as a token of respect and deep appreciation. Source: tribune.com.pk

The funds will help the country avoid default as it grapples with inflation and the aftermath of devastating floods. The IMF has demanded Islamabad implement structural reforms and increase tax collection. The International Monetary Fund (IMF) approved a $3 billion (€2.7 billion) bailout package for Pakistan on Wednesday. The decision follows months of talks with the South Asian country, which has been confronted with severe economic challenges and the prospect of default. Pakistan is facing an acute balance of payments crisis with central bank reserves that could only cover a month of controlled imports, and was also hit by devastating flooding last year. What did the IMF say about the deal? The IMF's Executive Board said the aid "aims to support immediate efforts to stabilize the economy and guard against shocks while creating the space for social development spending to help the people of Pakistan." The aid will be dispersed over nine months, with about $1.2 billion being disbursed immediately. The IMF said Pakistan was facing "a difficult external environment, devastating floods and policy missteps have led to large fiscal and external deficits, rising inflation and eroded reserve buffers in FY23." Pakistan received initial approval for the aid in June. The IMF asked Pakistan to raise consumer energy prices, let go of currency controls, improve tax collection and tighten monetary policy. The central bank is to raise its policy interest rate to a record high of 22% and the government is to raise $1.39 billion in new taxes. The organization also said that it wanted Islamabad to further progress in structural reforms, especially in the energy sector, state-owned enterprises and climate resilience. The bailout had been on hold since December, when the IMF refused to release $1.1 billion from the loan because of the country's lack of compliance with a 2019 agreement signed under the previous government headed by former Prime Minister Imran Khan. Imran Khan's government was toppled in a no-confidence vote in April 2022. Bailout gives Pakistan 'fiscal space' to move forward Prime Minister Shehbaz Sharif said the bailout "bolsters Pakistan's economic position to overcome immediate-to-medium-term economic challenges." He said that the funds gave the "next government the fiscal space to chart the way forward." The Pakistani head of government said that the deal was achieved against "the heaviest of odds" and "against [a] seemingly impossible deadline." Sharif's coalition government is due to face a national election later this year. Islamabad also recently received support from Saudi Arabia and the United Arab Emirates, which have provided $3 billion over the last two days. In the last three months, China had rolled over $5 billion in loans to save the country from default. The Fitch credit rating agency upgraded Pakistan's sovereign debt rating by one notch to CCC from CCC- on Monday. That agency says it perceives a "substantial credit risk" with "a real possibility" of default at this rating.   

IMF predicts 5.9 per cent growth for India. The country continues to remain a relative “bright spot” in the world economy, and will alone contribute 15 per cent of the global growth in 2023, International Monetary Fund (IMF) Managing Director Kristalina Georgieva said a couple of months back. The International Monetary Fund in its much-awaited World Economic Outlook report ‘A Rocky Recovery’ predicted that India would grow 5.9 per cent this year. The IMF maintained an optimistic outlook on India. This projected growth is propelled by the rich demographic dividend of the country and people’s growing income and propensity to consume. “We realised that 2020-2021 has been actually a lot better than we thought,” IMF economist Daniel Leigh said at a press briefing, responding to a question from The Hindu. The growth numbers were released as part of the World Economic Outlook (WEO): A Rocky Recovery report, launched at the start of the World Bank and IMF Spring Meetings in Washington DC. “And so actually, there’s less room for catching up,” Mr. Leigh said. For the fiscal year which ended March 31, the IMF had estimated a 6.8 per cent growth rate for India. “And that pent-up demand, from consumption that was informing our previous forecast, is going to be less because they’ve already had more catching up before,” Mr Leigh said. “Again, a very strong economy, which is necessary to allow India to continue to converge towards higher living standards and create those jobs that are necessary,” said Mr Leigh. The Hindu had asked about the outlook for jobs and employment. Global output growth is projected by the IMF to slow to 2.8 per cent in 2023 (calendar year), picking up to 3 per cent in 2024. India continues to remain a relative “bright spot” in the world economy, and will alone contribute 15 per cent of the global growth in 2023, International Monetary Fund (IMF) Managing Director Kristalina Georgieva said a couple of months back. While digitisation pulled out the world’s fifth-largest economy from pandemic lows, prudent fiscal policy and significant financing for capital investments provided in the next year’s Budget will help sustain the growth momentum. “India’s performance has been quite impressive. For this year, we expect India to retain a high growth rate, 6.8 per cent for the year that ends in March. For FY 2023/24 (April 2023 to March 2024) we project 6.1 per cent, a bit of slow down like the rest of the world economy, but way above the global average. And in that way, India is providing about 15 per cent of global growth in 2023,” Ms Georgieva told PTI in an interview. To compare the quantitative impact of different forces, the study relied on a macroeconomic model (PP) based on Platzer and Peruffo (2022) PP is a “real” macroeconomic model, in the sense that it abstracts from nominal and financial frictions that typically underlie cyclical fluctuations. Similarly, for tractability, uncertainty is assumed away. While these are reasonable assumptions for the study of medium- to long-term trends in the real interest rate, the model is ill-equipped to analyze the impact of the financial drivers discussed earlier. Nonetheless, PP still allows for foreign developments to affect domestic interest rates through their implication for net international capital flows. PP is calibrated to represent eight major global economies: the United States, Japan, Germany, the United Kingdom, France, China, India, and Brazil. These are the five largest advanced economies and the three largest emerging market and developing economies, which cover some 70 per cent of global GDP. Demographic developments, the age-earning profile, the share of income going to the richest 10 per cent, productivity trends, the retirement age, average pension replacement rates, labour share, government debt, and public expenditure inform the country-specific calibrations. India’s real GDP growth rates are calculated as per national accounts: for 1998–2011 with the base year 2004/05 and, thereafter, with the base year 2011/12. The WEF paper ‘A Rocky Recovery’ clarified that the projections are based on available information on the authorities’ fiscal plans, with adjustments for the IMF staff’s assumptions. Subnational data are incorporated with a lag of up to one year; general government data are thus finalised well after central government data. IMF and Indian presentations differ, particularly regarding disinvestment and license-auction proceeds, net versus gross recording of revenues in certain minor categories, and some public sector lending. Starting with FY2020/21 data, expenditure also includes the off-budget component of food subsidies, consistent with the revised treatment of food subsidies in the budget. The IMF staff adjusts expenditures to take out payments for previous years’ food subsidies, which are included as expenditures in budget estimates for FY2020/21. Monetary policy projections are consistent with achieving the Reserve Bank of India’s inflation target over the medium term, despite a recent uptick.

International Monetary Fund division chief Daniel Leigh on Tuesday reposed faith in the Indian economy and said that it is a "very strong economy." He said that India is one of the bright spots in the global economy right now with a high growth rate. "Yes, we have a growth rate for India which is 6.8 in 2022. Let's not forget this is one of the bright spots in the global economy right now. Such a high growth rate and it is moderating down to 5.9 with a -.2 revision compared to January, what's happening here is also a set of historical revisions," said Leigh. IMF on Tuesday lowered its growth projection for 2023-24 to 5.9 per cent from 6.1 per cent earlier but despite a significant drop, India continues to be the fastest-growing economy in the world, the World Economic Outlook figures revealed. "We realize that 2020-2021 has been actually a lot better than we thought and so actually there's less room for catching up. And that pent-up demand from consumers that were informing our previous forecast is therefore going to be less because they've already had more catching up before. So that's why there's a downward revision this year. Then we go up to 6.3 next year again, a very strong economy which is necessary to allow India to continue to converge towards higher living standards and create those jobs that are necessary," added Leigh. The IMF projects India's inflation to slow to 4.9 per cent in the current year and further to 4.4 per cent next fiscal year. IMF growth forecast is lower than the Reserve Bank of India (RBI) projection. The central bank predicted 7 per cent GDP growth for FY 2022-23 and 6.4 per cent in the ongoing fiscal that started on April 1. Meanwhile, the international lender flagged concerns about inflation, debt and risks to the financial sector from rising interest rates. It warned that if banks cut lending further, the global output will reduce by another 0.3 percentage point in 2023. "Despite the fillips from lower food and energy prices and improved supply-chain functioning, risks are firm to the downside with the increased uncertainty from the recent financial sector turmoil," the report said. The IMF projects growth to bottom out at 2.8 per cent in 2023, picking up to 3 per cent in 2024. Inflation is expected to stay elevated at 7 per cent for the rest of the year, before declining to 4.9 per cent next year. China's growth rate is projected to be 5.2 per cent in 2023 and 4.5 per cent in 2024 against its growth rate of three per cent in 2022. The US's growth forecast for 2023 is 1.6 per cent, France's 0.7 per cent, while Germany and the UK are a dismal -0.1 per cent and -0.7 per cent, respectively. Most countries will, however, avoid recession in 2023 despite the COVID pandemic lingering and tightening financing conditions as the Russia-Ukraine war continues.

A United States bank warned Pakistan that it will need to pause debt repayments if it does not secure funding from the International Monetary Fund soon enough, the Dawn reported. The Bank also stated that China, which is said to be a close ally of Pakistan, can rescue the country because of its close ties with the country. The bank's team of experts, which includes its economist Kathleen Oh, wrote: "China holds the key for relief in the near term as it is the largest creditor. With closer ties between China and Pakistan, the hope is rising for China to come on board to provide a backstop to its long-time ally", according to Dawn On Monday, Pakistan and IMF held a virtual meeting for moving towards striking a staff-level agreement between the two sides, as per the news report. Pakistan's Ministry of Finance and State Bank of Pakistan (SBP) tabled the external financing plan before the IMF with the goal of increasing the dwindling foreign exchange reserves, held by the SBP up to the USD 10 billion mark till the end of June 30, 2023, The News International reported. A top official source said the revival of the IMF programme will allow Islamabad to increase required dollar funding from all possible avenues, including getting rollover of upcoming China's SAFE deposits to the tune of USD 2 billion under the planned schemes, stated the news report. Further, as per the news report, the total Chinese SAFE deposits stood at USD 4 billion and the remaining maturity will become due in the coming months. According to The News International, the top official source said, "Under the planned schemes of things, the revival of the IMF program will enable Islamabad to muster up the required dollar funding from all possible avenues including multilateral, bilateral and commercial financing as well as getting rollover of upcoming China's SAFE deposits to the tune of USD 2 billion." The Pakistani side informed the IMF that Islamabad implemented all harsh measures and both sides should move towards signing the state-level agreement, as per the news report. Last week, Pakistan's Finance Minister Ishaq Dar said that external financing confirmation was not part of the prior action of the IMF for signing a state-level agreement, as per the news report. Citing sources, the report said there were nine tables under the Memorandum of Economic and Financial Policies (MEFP) that require to be fulfilled with the official figures. However, one of the tables related to envisaging the Net International Reserves (NIR) could not be fulfilled without incorporating the external financing needs of the programme period. Last week, the State Bank of Pakistan increased the interest rate by a massive 300 basis points (bps) taking it to a record-high level of 20 per cent, in accordance with the conditions set by the International Monetary Fund, The News International reported. The Monetary Policy Committee (MPC) has taken the decision to raise the policy rate to its highest level since October 1996 in an attempt to "anchor inflation expectations as it is critical and warrants a strong policy response," as per the news report. Pakistan's Central Bank increased the interest rate by 300 bps taking the total increase to 1,050 bs since January 2022 to counter rising inflation.