ISLAMABAD – Pakistan and the International Monetary Fund have finallyreached a staff level agreement on policies and reforms to complete thesixth review under six billion dollars Extended Fund Facility. Theagreement 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 ofPakistan (SBP) amendment bill from parliament before approving loan trancheof slightly above $1 billion in January 2022.
According to a statement by the IMF, completion of the review would makeavailable about 1059 million dollars to Pakistan bringing totaldisbursements under the Extended Fund Facility to 3,027 million dollars.This will help unlock significant funding from bilateral and multilateralpartners.
The IMF recognised that despite a difficult environment, Pakistan continuesto make progress on implementing the Extended Fund Facility programme. Allquantitative performance criteria for end-June were met with wide margins.The IMF also acknowledged Pakistan’s efforts in improving anti-moneylaundering and combating the financing of terrorism framework.
Prime Minister’s Advisor on Finance Shaukat Tarin said Monday thatnegotiations between Pakistan and the International Monetary Fundsuccessfully reached to an understanding under which the IMF will provideone billion dollars to Pakistan.
Addressing a news briefing, along with Energy Minister Hammad Azhar inIslamabad on Monday evening, he said the Fund has appreciated Pakistan’reforms in various sectors. He said the IMF emphasises on bringingtransparency to the governance of State Owned Enterprises, easing tax laws,and focusing on targeted subsidy. He said the IMF appreciated the EhsassProgram and Kamyab Jawan Program.
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The Advisor said the IMF has also recommended some prior actions, includingimposition of petroleum levy, rationalisation of the State Bank of Pakistanact, audit of Covid-19 pandemic expenditure, and the detail of beneficialowners of anti-Covid vaccine manufacturing companies. He said thegovernment will have to raise the petroleum levy by four rupees per litrein every quarter.
Speaking on the occasion, Hammad Azhar says there will be no impact onwinter package and industrial tariff as a result of prior actionrecommended by the IMF. He said perhaps, we will have to increaseelectricity tariff in next few months. He expressed the hope that therewill be more economic stability after this program.
“The Pakistani authorities and IMF staff have reached a staff-levelagreement on policies and reforms needed to complete the sixth review underthe EFF (Extended Fund Facility). The agreement is subject to approval bythe Executive Board, following the implementation of prior actions, notablyon fiscal and institutional reforms,” said IMF in a press statement onearly Monday.
Pakistan would have to complete five prior actions before IMF’s executiveboard meeting, which would meet in January 2022, said Adviser to the PrimeMinister on Finance and Revenue Shaukat Tarin in a press conference alongwith Federal Minister for Energy Hammad Azhar. Five prior actions includedwithdrawal of sales tax exemptions through supplementary bill (minibudget), approval of SBP amendment bill from the parliament, increasingpetroleum levy by Rs4 per litre per month so that it reached Rs30 perlitre, audit report of Covid-19 expenditures and Pakistan would provide thedetails of the beneficial owners of the vaccine supplying companies.
