Karachi March 25 2023: State Bank of Pakistan decided to withdraw existing Cash Margin Requirement (CMR) on import of 826 items with effect from March 31, 2023 to comply with the conditions of International Monetary Fund (IMF) for unlocking the program as country Current Account Deficit hit low of two years.
Non-intensification of exchange restrictions and the non-modification of multiple currency practices (MCP) is one of the continuous performance criteria set by the IMF.
On February 24, 2017 State Bank of Pakistan decided to obtain 100 percent cash margin on the import of 404 items (Annexure - A), which was later on extended by 131 items (Encl: Annexure-B) on July 16, 2018 and the list was further extended by 114 items (Encl: Annexure-C) on September 30, 2021. On April 7, 2022 the central bank extended the set of items subject to a 100-percent Cash Margin Requirement (CMR) on imports by 177 items (Annexure-D), bringing the share of items covered by CMRs to about 20 percent of total import values.
Current Account Deficit (CAD) recorded $0.1 billion in Feb 2023 against a deficit of $0.5 billion in Feb 2022, according to data published by State Bank of Pakistan. Cumulatively CAD reduced to $ 3.9 billion in Jul-Feb FY23 compared to a deficit of $ 12.1 billion in Jul-Feb FY22.
Currently, Pakistan is striving to complete Ninth Review of IMF Extended Fund facility for unlocking $1.2 billion funds. IMF need to ensure that the fund have financing assurances from bilateral and multilateral donors in place in order for us to be able to take the next step with Pakistan.
The EFF was approved by the IMF Executive Board on July 3, 2019 for SDR 4,268 million (about US$6 billion at the time of approval, or 210 percent of quota). In order to support program implementation and meet the higher financing needs in FY23, as well as catalyze additional financing, the IMF Board approved an extension of the EFF until end-June 2023, rephasing and augmentation of access by SDR 720 million that will bring the total access under the EFF to about US$6.5 billion.