Pakistan and the International Monetary Fund (IMF) conducted virtual meetings and have nearly reached an agreement on the fiscal framework for the current fiscal year. Reports The News from Pakistan

It is anticipated that Pakistan and the IMF will reach a staff-level agreement next week. The State Bank of Pakistan (SBP) is set to interact with the Fund mission regarding monetary policy and foreign exchange reserve targets for the conclusion of June 2023.

It appears that Pakistan and the IMF are close to reaching a consensus on the macroeconomic and fiscal framework for the current fiscal year. However, the uncertainty in the markets is causing some issues, as the government is struggling to generate domestic debt. The IMF is calling for an increase in the discount rate by at least 200 basis points to bring the real interest rate from negative to positive.

The government is seeking a real GDP growth rate target of 1.5 to 2 percent and CPI-based inflation at 29 percent, but these targets do not take into account the fiscal and energy sector adjustments that the government has made under the IMF’s prescriptions.

According to official sources, the Staff-Level Agreement (SLA) is expected to be signed next week. It remains to be seen how the market uncertainty and IMF’s conditions will impact Pakistan’s economy in the long term