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Tuesday, June 11, 2024

Pakistan finally secures deal with IMF

The government agrees to impose petroleum levy of Rs5 each month, up to Rs50.

In a major breakthrough, Pakistan and the International Monetary Fund (IMF) on Tuesday night reached an understanding on the federal budget for 2022-23, which lead to revival of the extended fund facility (EFF).

The deal was secured during a virtual meet between IMF staff mission and the Pakistani economic team, led by Finance Minister Miftah Ismail.

The authorities committed to generate Rs436 billion more taxes and increase petroleum levy gradually up to Rs50 per litre, according to sources.

Acknowledging that important progress, IMF Resident Representative in Pakistan, Esther Perez Ruiz sale on Wednesday, “Discussions between the IMF staff and the authorities on policies to strengthen macroeconomic stability in the coming year continue.”

The IMF mission will finalise monetary targets with the State Bank over the next couple of days and, in the meantime, share the draft of a Memorandum of Economic and Financial Policy (MEFP), Dawn reported.

“The MEFP would also contain certain prior actions that would be necessary for implementation before the IMF board takes up Pakistan’s case for approval and the subsequent disbursement of about $1bn next month.”

On Tuesday night, Federal Minister for Finance Miftah Ismail said, “Pakistan and the IMF locked the budget details and achieved substantial progress on finalising budgetary targets for 2022-23″.

“Now the MEFP will shared by the IMF soon,” he said.

Dawn cited to government sources as saying that “Pakistan also committed to deliver a Rs152bn primary budget surplus, which means the revenues would finance all expenditures, other than interest payments, and still leave Rs152bn surplus in the national kitty.”

According to Geo News, sources told that the government has also agreed “to slap Rs1,200 tax on salary earner of Rs50,000 to Rs100,000. The government made all-out efforts to convince the IMF but failed to do so. The FBR target has been proposed to be increased from Rs7,004 billion to Rs7,442 billion for the next fiscal. The expenditure target was revised downwards, so the revenue surplus of Rs152 billion would be achieved.”

It further added that “the IMF team will now finalise targets for net international reserves and net domestic assets, but everything on part of the agreement had been settled. The IMF team would share its draft MEFP with the government on Friday, sources said.”

The latest development comes a day after Federal Minister for Revenue and Finance Miftah Ismail had indicated the revival of the agreement with IMF within a day or two.

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“I am very hopeful that the IMF programme will be revived soon,” the finance minister had said while speaking to journalists.