The Executive Committee of the International Monetary Fund (IMF) has approved the revival of Pakistan’s Extended Fund Facility (EFF) program. The country will receive $1.17 billion in seventh and eighth tranches, he said on Monday, Finance Minister Miftah Ismail.
“Alhamdolillah the IMF Board has approved the revival of our EFF program. We should now be getting the 7th & 8th tranche of $1.17 billion,” he tweeted.
Alhamdolillah the IMF Board has approved the revival of our EFF program. We should now be getting the 7th & 8th tranche of $1.17 billion. I want to thank the Prime Minister @CMShehbaz for taking so many tough decisions and saving Pakistan from default. I congratulate the nation.
— Miftah Ismail (@MiftahIsmail) August 29, 2022
The minister congratulated the people and thanked Prime Minister Shebaz Sharif for “making the tough decisions” and “saving Pakistan from default”.
The IMF is now disbursing about $1.2 billion to Pakistan immediately, with up to $4 billion available for the remainder of this fiscal year, which begins July 1.
However, official statements from global lenders are still pending.
The development comes a day after the coalition accused his PTI of “trying to jeopardize the IMF’s lending program” after the Khyber Pakhtunkhwa government allegedly refused to implement the terms of the fund’s agreement in a letter. It was conducted.
In the letter, KP Finance Minister Jagra said the KP government may have difficulty generating a state surplus given the damage from this year’s floods. Importantly, securing a state surplus this year is a key requirement previously agreed to revitalize the IMF program.
Road to the agreement
Pakistan joined the IMF program in 2019, but has so far only paid half of the money as Islamabad struggles to keep its goals on track.
The last payment was made in his February, and the next tranche was due to be reviewed in his March, but the exiled Imran his Prime Minister Khan’s government has made budget targets and costs that have derailed the programme. Introduced a fuel price cap on
The new coalition has lifted price caps and petrol and diesel prices have risen by 66% and 92%, respectively, in more than a month.
On June 21, Pakistani officials and IMF staff revived a stalled lending program after officials pledged to collect another 436 billion rupees in taxes and raise petroleum taxes to 50 rupees per liter. agreed on a federal budget for the fiscal year for .
As a result, the IMF staff acknowledged in a statement that important progress had been made on the federal budget. Based on this, Pakistan has committed in writing from each province to provide the center with a donation of rupees.
In addition, Pakistan is now obligated to directly adjust monthly fuel costs to meet IMF demands in a timely manner, as well as raise power tariffs by Rs 7.91 per unit.
On June 28, Ismail announced that Pakistan had received an Economic and Fiscal Policy Memorandum (MEFP) from the IMF in conjunction with her seventh review and her eighth review.
His MEFP amended was based on the budget measures announced by Ismail in his closing remarks on the revised budget of the National Assembly, which included his 1,716 trillion rupees (2.2% of his GDP) mainly due to taxation. It included over budget adjustments. Over cent tax on 13 branches and personal income tax covering monthly income exceeding Rs 50,000 per month.
In addition, there are fixed tax regimes for industries such as retailers, merchants, jewelers, construction companies, restaurants, automobiles and real estate agents. This is the largest fiscal adjustment in a single year and will help transform the primary deficit (the difference between revenue and expenditure excluding interest payments) of INR 1.6 trillion this fiscal year to a surplus of INR 152 billion next year. .