Pakistan, IMF agree to number of points for completion of EFF’s ninth review

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ISLAMABAD
Pakistan and the International Monetary Fund (IMF) have mutually agreed to a number of points for the completion of ninth review of the Extended Fund Facility (EFF), entitling Pakistan to a 1.2 billion dollars tranche.
This was stated by Minister for Finance Ishaq Dar at a news conference in Islamabad on Friday after conclusion of talks with the IMF Mission that was on a visit to Pakistan.
Sharing broad contours of the understanding reached with the IMF, the Finance Minister said taxation measures of one hundred and seventy billion rupees will be taken as opposed to the rumours of seven hundred to eight billion rupees.
“Good news is [that] as per their commitment, the team has gone according to their plan. As per their commitment, we have received MEFP. The draft is with us, we will study it and from Monday we will engage in virtual discussion with the fund,” Dar said.
Once completed and approved by the IMF Executive Board, Pakistan would receive the next tranche of SDR 894 million ($1.2 billion), the finance minister said.
The minister said, the ten-day dialogue with IMF concluded positively and there was no ambiguity on anything. The final round was held on Thursday during which “we mutually agreed and finalized all the things”.
He said there was mutual understanding to complete the programme, for the second time in the country’s history, adding the government was committed to fulfill its sovereign commitments.
The minister said the team had also a courtesy zoom meeting with Prime Minister, wherein the PM said that the things agreed by the finance team would be implemented.
Talking about the outcomes of the negotiations, the minister said the policy package with IMF included Rs 170 billion fiscal measures. He said it was agreed to generate additional Rs 170 billion new taxes, however, added the government would not impose any such taxes that would directly impact the common man. He said, for imposing new taxes, a new finance bill may be presented in the parliament.
He said that it was agreed to increase the financial volume of the Benazir Income Support Programme (BISP) by Rs40 billion and take it from the existing Rs 360 billion to Rs 400 billion to provide relief to the commoners.
Dar said that the government was committed to reform the energy sector to reduce the losses. He said the cost of electricity generation was Rs30,000 billion whereas recovery was just Rs18,000 billion, which results in huge losses. He said the government prioritized implementing energy reform and do away with untargeted subsidies.
The finance minister said the government was also committed to zero debt in the gas sector to rationalize the sector. He that the government also pursued the agenda for Privatization to stop the bleeding of resources.
To a question, he expressed the hope that the government would receive payment from friendly countries as per their commitments on the international forum.
Dar said that because of the bad policies of the Pakistan Tehreek -e-Insaf government, a credibility gap developed between Pakistan and IMF. He said that the PTI government was responsible for the current economic situation.
Earlier, the International Monetary Fund (IMF) in a statement said, considerable progress was made on policy measures to address domestic and external imbalances. It said virtual discussions would continue in the coming days to finalize the implementation details of these policies.
The statement said, the IMF mission led by Nathan Porter visited Islamabad during January 31 – February 9 to hold discussions under the ninth review of the authorities’ program supported by IMF’s Extended Fund Facility (EFF) arrangement.
“The IMF team welcomes the Prime Minister’s commitment to implement policies needed to safeguard macroeconomic stability and thanks the authorities for the constructive discussions,” Porter said in a statement.
He said key priorities include strengthening the fiscal position with permanent revenue measures and reduction in untargeted subsidies, while scaling up social protection to help the most vulnerable and those affected by the floods; allowing the exchange rate to be market determined to gradually eliminate the foreign exchange shortage; and enhancing energy provision by preventing further accumulation of circular debt and ensuring the viability of the energy sector.
“The timely and decisive implementation of these policies along with resolute financial support from official partners are critical for Pakistan to successfully regain macroeconomic stability and advance its sustainable development,” he added.