IMF has set 5 conditions for revival of the Extended Fund Facility for Pakistan
ISLAMABAD - Pakistan and the International Monetary Fund have finally reached a staff level agreement on policies and reforms to complete the sixth review under six billion dollars Extended Fund Facility. The agreement is subject to approval by the Executive Board of the IMF.
The IMF has set five prior actions for Pakistan included mini budget, increasing petroleum levy by Rs4 every month and approval of State Bank of Pakistan (SBP) amendment bill from parliament before approving loan tranche of slightly above $1 billion in January 2022.
According to a statement by the IMF, completion of the review would make available about 1059 million dollars to Pakistan bringing total disbursements under the Extended Fund Facility to 3,027 million dollars. This will help unlock significant funding from bilateral and multilateral partners.
The IMF recognised that despite a difficult environment, Pakistan continues to make progress on implementing the Extended Fund Facility programme. All quantitative performance criteria for end-June were met with wide margins. The IMF also acknowledged Pakistan’s efforts in improving anti-money laundering and combating the financing of terrorism framework.
Prime Minister’s Advisor on Finance Shaukat Tarin said Monday that negotiations between Pakistan and the International Monetary Fund successfully reached to an understanding under which the IMF will provide one billion dollars to Pakistan.
Addressing a news briefing, along with Energy Minister Hammad Azhar in Islamabad on Monday evening, he said the Fund has appreciated Pakistan’ reforms in various sectors. He said the IMF emphasises on bringing transparency to the governance of State Owned Enterprises, easing tax laws, and focusing on targeted subsidy. He said the IMF appreciated the Ehsass Program and Kamyab Jawan Program.
The Advisor said the IMF has also recommended some prior actions, including imposition of petroleum levy, rationalisation of the State Bank of Pakistan act, audit of Covid-19 pandemic expenditure, and the detail of beneficial owners of anti-Covid vaccine manufacturing companies. He said the government will have to raise the petroleum levy by four rupees per litre in every quarter.
Speaking on the occasion, Hammad Azhar says there will be no impact on winter package and industrial tariff as a result of prior action recommended by the IMF. He said perhaps, we will have to increase electricity tariff in next few months. He expressed the hope that there will be more economic stability after this program.
“The Pakistani authorities and IMF staff have reached a staff-level agreement on policies and reforms needed to complete the sixth review under the EFF (Extended Fund Facility). The agreement is subject to approval by the Executive Board, following the implementation of prior actions, notably on fiscal and institutional reforms,” said IMF in a press statement on early Monday.
Pakistan would have to complete five prior actions before IMF’s executive board meeting, which would meet in January 2022, said Adviser to the Prime Minister on Finance and Revenue Shaukat Tarin in a press conference along with Federal Minister for Energy Hammad Azhar. Five prior actions included withdrawal of sales tax exemptions through supplementary bill (mini budget), approval of SBP amendment bill from the parliament, increasing petroleum levy by Rs4 per litre per month so that it reached Rs30 per litre, audit report of Covid-19 expenditures and Pakistan would provide the details of the beneficial owners of the vaccine supplying companies.