Govt to send LoI to IMF today

Govt to send LoI to IMF today

A mini budget will be unveiled through a Presidential Ordinance to fetch additional taxes

Islamabad: The government prepares to send a signed Letter of Intent (LoI) to the International Monetary Fund (IMF) on Tuesday (today) as Islamabad has issued a new request for IMF staff to make some changes is made.

Mini-budgets are now being revealed through the issuance of executive orders imposing additional taxes. “Pakistan officials are currently in talks with his IMF mission chief and are requesting that the LoI be made with some changes,” a senior official told The News late Monday night.

The IMF Executive Board will meet on August 29, 2022 in Washington, D.C. Having completed the 7th and 8th reviews, he will next meet under the Enhancement Fund Facility (EF) to consider Pakistan’s request to release a $1.17 billion tranche. Pakistan also asked the IMF to increase her EFF program by $1 billion.

Federal Finance Minister Mikhta Ismail and Deputy Governor of the National Bank of Pakistan (SBP) Dr. Murtaza Syed formally sign the LoI document and send it to the IMF Executive Board. Then, 15 days before his IMF Board meeting, a signed memorandum of understanding will be distributed to Board members to restart the stalled funding program.

So far, Pakistan has received her $3 billion and approval of the next tranche will increase total spending under her existing EFF program to her $4 billion. An additional $3 billion is now left in Pakistan, which will be repaid under his expanded $7 billion program after completing three more of his reviews.

According to the highest official sources, the government is currently preparing an ordinance to announce a mini-budget ahead of August 29, 2022 in Washington, D.C. Scheduled meeting of the IMF Executive Board. FBR sources say the government will issue an ordinance to take additional tax measures to offset tax losses incurred as a result of retailers waiving the fixed tax on electricity bills.

“Yes, we are working on regulations that may be announced before the IMF Board meeting,” the official said, adding that reviving the IMF program would help the government increase dollar inflows, mostly from multilateral creditors. , added that it will help to restart the program – / loan for policy budget support. Pakistan’s foreign exchange reserves held by  SBP have dropped significantly, reaching US$7.8 billion on 5 August 2022, compared to over US$20 billion in the same month of 2021. In the last 12 months alone he lost $12.2 billion.

Such a plunge in foreign exchange reserves must have sounded alarm bells for Q Block (Ministry of Finance) residents and the National Bank of Pakistan. Imminent short-term crisis.

Credit/Source : THENEWSPK