The governor of SBP is hopeful that an IMF agreement can be reached soon.
Islamabad Jameel Ahmed, the governor of the State Bank of Pakistan (SBP) has voiced hope that Pakistan is nearing completion of a staff level agreement (SLA) with the International Monetary Fund (IMF). He made his comments Thursday after answering questions from the media about the ongoing negotiations at a Public Accounts Committee (PAC) meeting held at Parliament House.
The SBP president promised that virtual talks between the Pakistani government and IMF teams are actively continue to resolve remaining policy matters, notwithstanding the lack of a definite timetable for the agreement. It is anticipated that the agreement will open the door for the subsequent funding tranche under the Extended Fund Facility (EFF) which is essential for Pakistan’s external finance requirements and economic stability.
Updated Economic Objectives
Governor Ahmed also unveiled updated economic forecasts for the current fiscal year during the PAC session:
- Target for remittances: Increased to $36 billion, in line with encouraging patterns in foreign inflows.
- GDP growth: A modest recovery is anticipated, with an expected range of 2.5% to 3.5%.
- Inflation: Anticipated to hover around 7%, indicating indications of price stability.
- The current account deficit has been revised downward to reflect the government’s better trade balance and budgetary tightening initiatives.
The governor of the SBP pointed out that although the central bank gives the Finance Division preliminary exchange rate assessments at the beginning of every fiscal year, these are frequently impacted by a number of variables that impact the exchange rate throughout the year, including inflation, petroleum prices and general market sentiment.
Clarification of Exchange Rate Policy
The exchange rate for the federal budget is first set and can be modified quarterly or biannually in collaboration with the SBP Ministry of Finance Secretary Imdadullah Bosal explained during the meeting. The government can modify its budgetary policies in response to changes in the economy thanks to this adaptable approach.
Budget Honoraria Policy and Audit Concerns
Concerns over honoraria payments given to employees participating in the yearly budget process were also discussed at the PAC meeting. The lack of an approved policy led to the flagging of these payments.
A new honoraria policy is being prepared and has been submitted to the Cabinet’s Economic Coordination Committee (ECC), Secretary Bosal stated. After it is adopted, the policy will not only help the Federal Board of Revenue (FBR) but also staff of 50-60 government agencies.
Four categories of honoraria would be awarded to 45% of qualified employees under the proposed scheme, including:
- Honoraria based on performance
- Extra honoraria for duty
- Honoraria for special tasks
- Extraordinary bonuses for contributions
With the current overtime payment procedures in place, PAC members questioned the necessity of honoraria. Bosal said that in order to guarantee openness and equity the policy seeks to codify and simplify such payments.
Limitations on Payment Timing
The scheduling of honoraria and payroll approvals was another administrative issue that was brought up. Regular payroll processing is not feasible because honoraria permissions are frequently granted in late June and the payroll system closes on the 21st of every month. In order to solve this, cash payments are made with the Accountant General of Pakistan Revenues’ (AGPR) approval via the Drawing and Disbursing Officer (DDO) procedure.
