The development follows the completion of $4 billion in bilateral financing from four friendly countries, including China and Saudi Arabia
The development follows the completion of $4 billion in bilateral financing from four friendly countries, including China and Saudi Arabia
The IMF’s executive board will meet on August 29 to approve a bailout package for cash-strapped Pakistan within this month, including the payment of nearly $1.18 billion in dues.
The development follows the completion of $4 billion in bilateral financing from four friendly countries, including China and Saudi Arabia, and will pave the way for immediate disbursements, expected to be on Pakistan’s account before the end of working hours on August 31 .
Finance Minister Miftah Ismail told dawn That a letter of intent (LOI) was received early Friday from the lender for the revival of the program under the Employee Level Agreement (SLA) and the Memorandum of Economic and Fiscal Policies (MEFP) signed last month.
“We are going through the LOI, will sign and send [it] The International Monetary Fund (IMF) may be back soon and is awaiting a (executive) board meeting later this month for approval.
Sources said the executive board meeting will be held on August 29 in which the matter of Pakistan will be taken up to complete the seventh and eighth review of the Extended Fund Facility (EFF). Its term has been extended till August 2023.
He also said that the board meeting was convened by Saudi Arabia, the United Arab Emirates, Qatar and China after the IMF confirmed that they had arranged $4 billion in bilateral financing to Pakistan, after the completion of the bailout. There was a final hitch to the package. All prior actions are agreed upon under the SLA.
The IMF board’s approval was expected to reverse steadily depleting forex reserves, strengthen the Pakistani rupee and support the balance of payments.
With the increase in petroleum development tariffs on oil products on 31 July, the IMF publicly confirmed that Pakistan had completed all prior actions for the revival of its programme, but required confirmation by its executive board to Rs 1.18 billion. The approval for the distribution of dollar funds was added. Additional inflows of $4 billion from four friendly countries.
The finance minister had earlier claimed that $8.5 billion-$10 billion had flown in from friendly countries against the $4 billion funding gap estimated by the IMF, but also attributed the political turmoil in the country to sharp currency depreciation and a Attributed to fast stock. Market.
The IMF had on July 13 announced a much-anticipated staff-level agreement with Pakistan, including a nine-month extension and a $1 billion increase in the size of the bailout package, to $7 billion, with nearly $1.18 billion. Advance disbursement of Rs.
Its approval from the IMF’s executive board, however, was linked to a series of prior actions taken by the government over the past two weeks.
‘Additional measures to meet program objectives’
On top of this, the IMF made it binding on officials “to be prepared to take any additional measures necessary to meet the objectives of the program, given the high uncertainty in the global economy and financial markets”.
Since then, the government has waived taxes on small traders and decided to put in excess of 40 billion Pakistani rupees eligible for additional tax, an overlooked supplementary grant needed to provide relief to Pakistani State Oil, of which more than 610 billion rupees. is stuck. Due to non-payment by the public sector with the government, its institutions or private companies.
Similarly, the government also made a commitment to ensure timely implementation of the electricity tariff rebasing already prescribed by the electricity regulator along with quarterly and monthly adjustments to rein in the mounting circular debt, which is estimated to last year. The fund ending June saw an increase of Rs 850 billion. 30. The government has now notified a program for gradual increase in electricity rates.
The government has since also revised the development duty on petroleum products to Rs 20 per liter on petrol and Rs 10 per liter on high-speed diesel, light diesel and kerosene – the last ex-action under the commitment.
The original $39 billion value of the 6-month Extended Fund Facility (EFF) – agreed in 2019 – would be provided to countries facing severe payments imbalances due to structural constraints or slow growth and an inherently weak balance of payments position. Was done – was to end in September. According to Dawn, the program suffered frequent breakdowns, but so far only three tranches amounting to about $3 billion could be disbursed.
Since the ouster of Imran Khan in April, Pakistan’s currency has slumped to an all-time low of 240, amid uncertainty about IMF aid.
Earlier this month, New York-based rating agency S&P Global revised Pakistan’s long-term rating from ‘stable’ to ‘negative’ in view of rising inflation and tighter global financial conditions.