MAYASIA BUSINESS OUTLOOK9Prime Minister Shehbaz Sharif of Pakistan has highlighted positive developments in the country's economic indicators, emphasizing progress in implementing painful reforms and privatization initiatives. In a televised address to his cabinet, Sharif noted a rise in exports and remittances within a relatively short period since assuming office.The International Monetary Fund (IMF) board is set to convene on Monday to consider the disbursement of the second and final tranche of a $3 billion standby arrangement secured by Islamabad last summer to prevent a sovereign default. Pakistan faces a significant balance of payment crisis, requiring $24 billion for debt and interest servicing in the upcoming fiscal year, which is three times more than its central bank's foreign currency reserves.Pakistan is actively pursuing another long-term, larger IMF loan, with Finance Minister Muhammad Aurangzeb indicating that a staff-level agreement on the new program could be reached by early July. If successful, this would mark the country's 24th IMF bailout.The IMF-led structural reforms necessitate raising Pakistan's tax-to-GDP ratio from approximately nine percent to at least 13-14 percent, addressing losses in state-owned enterprises, and managing losses in the energy sector, which amount to trillions of rupees.Sharif likened the required reforms to a surgical intervention rather than a simple antibiotic treatment, emphasizing the depth of the changes needed to address Pakistan's economic challenges. Pakistan's central bank is widely expected to hold its key interest rate at a record 22 per cent for the seventh straight policy meeting on Monday as Pakistan gears up for an International Monetary Fund board approval and talks on a longer-term program.Monday's policy decision will be followed by the fund's executive board meeting to discuss the approval of $1.1 billion in funding for Pakistan, which is the last tranche of a $3 billion standby arrangement with the IMF secured last summer to avert a sovereign default.The median estimate in a Reuters poll of 14 analysts predicts the State Bank of Pakistan (SBP) will hold rates steady. Four analysts are forecasting a 100-basis-point (bps) cut, while two expect a 50-bps cut on Monday.Eight respondents expect a rate cut before Pakistan signs a new program with the IMF. There is another MPC meeting on 10 June 2024, which is possibly before Pakistan gets another IMF Program. The South Asian nation is seeking a new long-term, larger IMF loan. Pakistan's Finance Minister, Muhammad Aurangzeb, has said Islamabad will begin talks with the fund next month, and could secure a staff-level agreement on the new program by early July.Pakistan's key rate was last raised in June to fight persistent inflationary pressures and to meet one of the conditions set by the IMF for securing the bailout.Pakistan's Consumer Price Index (CPI) for March rose 20.7 percent from the year before, slowing down partly due to the "base effect", touching a record high of 38 percent in May 2023. PAKISTAN SHOWING POSITIVE ECONOMIC DEVELOPMENT, SAYS PMPAKISTAN'S CENTRAL BANK TO HOLD INTEREST RATE AT 22 PERCENT AHEAD OF IMF APPROVALNEWSROOM
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