SBP Governor Optimistic About Reaching IMF Agreement Soon

State Bank of Pakistan (SBP) Governor Jameel Ahmed expressed optimism on Thursday that Pakistan and the International Monetary Fund (IMF) will soon reach a staff-level agreement (SLA). His comments came after a Public Accounts Committee (PAC) meeting held at the Parliament House, where he responded to media inquiries regarding the timeline for finalizing the SLA. However, neither the SBP governor nor the Secretary of the Ministry of Finance provided a specific timeframe for signing the agreement. He noted that virtual meetings between the government and the IMF regarding policy discussions would continue. He also announced that the remittances target for the current fiscal year has been revised to $36 billion, with GDP growth expected to range between 2.5% and 3.5%. Additionally, the current account deficit target has been reduced, and inflation is anticipated to remain around 7% for the fiscal year. During the committee meeting, the SBP governor explained that the SBP provides assessments to the Finance Division based on the prevailing exchange rate at the start of the financial year. He highlighted that multiple factors, including inflation, petroleum prices, and market sentiment, significantly influence the exchange rate throughout the fiscal year. Ministry of Finance Secretary Imdadullah Bosal informed the committee that the exchange rate is determined at the time of the federal budget and can be reviewed quarterly or biannually in consultation with the SBP. The meeting also addressed an audit objection regarding the payment of honoraria to officers and staff involved in the annual budget exercise without an approved policy. Bosal stated that the Finance Ministry would present a new honoraria policy to the Cabinet. This policy, which is implemented during budget execution, will benefit employees from 50-60 entities, not just those from the Federal Board of Revenue (FBR). Under the proposed honoraria policy, 45% of employees in relevant departments would receive four types of honoraria, including performance-based, additional, and special honoraria. PAC members raised concerns about the rationale for paying honoraria in light of the existing overtime payment policy for government employees. In response, the finance secretary noted that the Prime Minister had directed the Finance Division to present an honoraria policy to the federal cabinet. The Finance Division has complied by submitting the policy to the Economic Coordination Committee (ECC) of the Cabinet. The payroll system operates on the 21st of each month, while budget honoraria are typically approved in the last week of June, making it impossible to process these payments through the AGPR payroll system. Consequently, the AGPR approves cash payments through the Drawing and Disbursing Officer (DDO) in the final days of the financial year.