Pakistan finance minister hopeful of IMF agreement within ‘1 or 2 days’

So far, Pakistan and the IMF have not yet been able to reach close to a staff-level agreement for revival of the loan programme.


Finance minister Miftah Ismail speaks to reporters on Monday. — DawnNewsTV/File

June 21, 2022

ISLAMABAD – Finance Minister Miftah Ismail on Monday expressed hope that an agreement with the International Monetary Fund (IMF) for the revival of the Extended Fund Facility (EFF) would be reached “within one or two days”.

The minister made the remarks while speaking to reporters after a meeting of the Senate Standing Committee on Finance.

When asked whether the prime minister was working on imposing taxes or giving relief to the masses, the minister said: “It depends on the kind of people they are. If they are well-to-do, then taxes will be applicable but the poor will be provided relief.”

Reporters also asked Miftah whether the Fund was opposed to the government’s decision to increase the salaries of employees by 15 per cent and tax exemption for those earning less than Rs1.2m annually.

“The IMF has nothing to do with salaries as long as we have the money,” he said, adding that the government will “protect” those earning less than Rs1.2m annually.

Pakistan signed a 39-month, $6 billion EFF in July 2019, but the Fund stopped the disbursement of about $3bn when the previous government reneged on its commitments. Currently, Islamabad wants the IMF to not only resume disbursements, but to also expand the size and duration of the programme.

So far, Pakistan and the IMF have not yet been able to reach close to a staff-level agreement for revival of the loan programme, leaving authorities in a tight spot to bridge the gap and get the updated federal budget for the fiscal year 2022-23 passed by the National Assembly.

The authorities in the finance ministry were expecting to conclude the staff-level agreement by Sunday (June 19) on the basis of revenue and expenditure measures that could deliver next year’s primary budget (the difference between revenues and expenditures, excluding interest payment) in Rs152bn surplus.

However, the IMF staff still has reservations over Rs9.5 trillion expenditures projected by the authorities for the next fiscal year. The revenue measures in the budget, according to IMF estimates, are also insufficient to deliver slightly over Rs7tr target.

A top finance ministry official confirmed on Sunday night that they had not yet received the first draft of memorandum of economic and financial policies (MEFP) from the IMF as targeted earlier because certain matters remained unsettled. “We are working very closely with the IMF and will soon reach some conclusion,” the official said.

The government is targeting to secure the passage of the budget 2022-23 from the National Assembly on June 27-28, according to the finance ministry’s schedule of events. For this to happen, it has to reach an agreement with the IMF so that the agreed measures could be protected in the budget. In any case, the budget has to be passed by parliament by June 28 to legally ensure its implementation with effect from July 1, as required under the Constitution.

Meanwhile, diplomatic sources say the United States has agreed to help Pakistan negotiate a deal with the Fund.

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