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IMF is a quick sand that is not easy to get out of. This country is stuck in this mud and I don't think there is any way to get out of it now.
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Contact the PP Team
IMF board approves $7bn loan programme for Pakistan [Post Updated #474]
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Finance minister hopes IMF, Pakistan strike next deal by mid-July
Finance Minister Muhammad Aurangzeb hoped that Pakistan and the International Monetary Fundy (IMF) reach a staff-level agreement by mid-July for the next expanded loan deal, The News reported Sunday.
Talking to journalists at the Pakistani embassy in Washington at conclusion of his week-long US trip, Aurangzeb said the long ignored economic reforms agenda should be implemented for a healthy economy.
Pakistani Ambassador to US Masood Khan was also present on this occasion.
The minister anticipated an IMF team to come to Pakistan by mid-May to finalise the terms of the new extended loan arrangement. "The new programme's draft will take form later. By mid-May, we will begin delving more into the specifics of the project," he stated.
He hailed the current Stand-by Arrangement (SBA) as a success and expressed optimism that the last tranche of 1.1 billion dollars will be disbursed shortly following the IMF executive board’s approval by April end. The IMF has already said that its executive board will review Pakistan's SBA during a meeting scheduled by the end of this month.
“Direction for reforms of the economy is clear. The ball is in our court and we will have to work hard. Efforts to access the Chinese markets are underway. Improvement in taxation system will multiply the tax collections. While, we are bringing digitalisation in the Federal Board of Revenue (FBR) system as well,” he said.
Aurangzeb said progress on the public institute’s privatisation was also on the anvil. Debt on the Pakistan International Airline (PIA) continued to accumulate manifold every year, which the government had to bear, he said, adding that in the past the state’s efforts of privatisation encountered resistance.
The finance minister apprised that Saudi Arabia would invest $5 billion in Pakistan and the Saudi delegation told him in the meeting that some of the transactions would be carried out in next few days. He said big investors had hinted at investment in Pakistan.
Meanwhile, the Pakistani envoy to US said the finmin held meetings with representatives of the credit rating agencies and investors. He also invited Silicon Valley’s tech entrepreneurs for investment, he said, adding that the behaviour in the US regarding Pakistan had changed.
“Pakistan holds extensive opportunities for investment in the technology sector,” he said.
Khan said the minister called on his Saudi Arabian, Chinese and Turkish counterparts in the sidelines of the G20 Finance Ministers and Central Bank Governors' Meeting at the IMF. The US authorities had assured Pakistan of full cooperation, whereas good news would soon come for the country from the IMF and World Bank, he said.
GEO TV
Finance Minister Muhammad Aurangzeb hoped that Pakistan and the International Monetary Fundy (IMF) reach a staff-level agreement by mid-July for the next expanded loan deal, The News reported Sunday.
Talking to journalists at the Pakistani embassy in Washington at conclusion of his week-long US trip, Aurangzeb said the long ignored economic reforms agenda should be implemented for a healthy economy.
Pakistani Ambassador to US Masood Khan was also present on this occasion.
The minister anticipated an IMF team to come to Pakistan by mid-May to finalise the terms of the new extended loan arrangement. "The new programme's draft will take form later. By mid-May, we will begin delving more into the specifics of the project," he stated.
He hailed the current Stand-by Arrangement (SBA) as a success and expressed optimism that the last tranche of 1.1 billion dollars will be disbursed shortly following the IMF executive board’s approval by April end. The IMF has already said that its executive board will review Pakistan's SBA during a meeting scheduled by the end of this month.
“Direction for reforms of the economy is clear. The ball is in our court and we will have to work hard. Efforts to access the Chinese markets are underway. Improvement in taxation system will multiply the tax collections. While, we are bringing digitalisation in the Federal Board of Revenue (FBR) system as well,” he said.
Aurangzeb said progress on the public institute’s privatisation was also on the anvil. Debt on the Pakistan International Airline (PIA) continued to accumulate manifold every year, which the government had to bear, he said, adding that in the past the state’s efforts of privatisation encountered resistance.
The finance minister apprised that Saudi Arabia would invest $5 billion in Pakistan and the Saudi delegation told him in the meeting that some of the transactions would be carried out in next few days. He said big investors had hinted at investment in Pakistan.
Meanwhile, the Pakistani envoy to US said the finmin held meetings with representatives of the credit rating agencies and investors. He also invited Silicon Valley’s tech entrepreneurs for investment, he said, adding that the behaviour in the US regarding Pakistan had changed.
“Pakistan holds extensive opportunities for investment in the technology sector,” he said.
Khan said the minister called on his Saudi Arabian, Chinese and Turkish counterparts in the sidelines of the G20 Finance Ministers and Central Bank Governors' Meeting at the IMF. The US authorities had assured Pakistan of full cooperation, whereas good news would soon come for the country from the IMF and World Bank, he said.
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Pakistan's case for the release of International Monetary Fund's (IMF) final tranche of $1.1 billion will be presented in the global lender's executive board meeting which is scheduled for today, Finance Ministry sources told Geo News on Monday.
The IMF delegation has already recommended for the installment’s release. Meanwhile, sources said that the $1.1 billion tranche was expected to be approved if the case was presented before the board.
“Pakistan is waiting to receive the third and final installment under the SBA agreement. While the country has already received $1.9 billion from the IMF under the agreement,” the sources said.
They added that staying within the agreement, Pakistan had implemented the targets agreed with the IMF.
The sources further said that the economic team would hold talks with the Washington-based lender for a new loan programme in May.
The IMF delegation will arrive in Pakistan around mid-May for negotiations under the new loan programme as Pakistan is seeking a new long-term Extended Fund Facility (EFF) after a current $3 billion Stand-By Arrangement (SBA).
PM meets IMF chief
On the sidelines of the World Economic Forum Special Meeting in Riyadh, Prime Minister Shehbaz Sharif on Sunday discussed new loan agreement with IMF Managing Director Kristalina Georgieva.
In his first meeting with the IMF chief since his re-election, PM Shehbaz reiterated his government’s commitment to put Pakistan’s economy back on track, according to a statement issued by the PM Office.
“Both sides also discussed Pakistan entering into another IMF programme to ensure that the gains made in the past year were consolidated and its economic growth trajectory remained positive,” the statement added.
PM Shehbaz thanked IMF chief Georgieva for her support to Pakistan in securing the $3 billion SBA from the international lender last year that was now nearing its completion.
The IMF chief appreciated the leadership of PM Shehbaz for timely securing SBA last year, as per the statement.
During the meeting, the prime minister said that he had directed his financial team, led by Finance Minister Muhammad Aurangzeb, to carry out structural reforms, ensure strict fiscal discipline and pursue prudent policies that would ensure macro-economic stability and sustained economic growth.
The IMF MD shared her institution’s perspective on the ongoing programme with the premier, including the review process.
Source: Geo News
The IMF delegation has already recommended for the installment’s release. Meanwhile, sources said that the $1.1 billion tranche was expected to be approved if the case was presented before the board.
“Pakistan is waiting to receive the third and final installment under the SBA agreement. While the country has already received $1.9 billion from the IMF under the agreement,” the sources said.
They added that staying within the agreement, Pakistan had implemented the targets agreed with the IMF.
The sources further said that the economic team would hold talks with the Washington-based lender for a new loan programme in May.
The IMF delegation will arrive in Pakistan around mid-May for negotiations under the new loan programme as Pakistan is seeking a new long-term Extended Fund Facility (EFF) after a current $3 billion Stand-By Arrangement (SBA).
PM meets IMF chief
On the sidelines of the World Economic Forum Special Meeting in Riyadh, Prime Minister Shehbaz Sharif on Sunday discussed new loan agreement with IMF Managing Director Kristalina Georgieva.
In his first meeting with the IMF chief since his re-election, PM Shehbaz reiterated his government’s commitment to put Pakistan’s economy back on track, according to a statement issued by the PM Office.
“Both sides also discussed Pakistan entering into another IMF programme to ensure that the gains made in the past year were consolidated and its economic growth trajectory remained positive,” the statement added.
PM Shehbaz thanked IMF chief Georgieva for her support to Pakistan in securing the $3 billion SBA from the international lender last year that was now nearing its completion.
The IMF chief appreciated the leadership of PM Shehbaz for timely securing SBA last year, as per the statement.
During the meeting, the prime minister said that he had directed his financial team, led by Finance Minister Muhammad Aurangzeb, to carry out structural reforms, ensure strict fiscal discipline and pursue prudent policies that would ensure macro-economic stability and sustained economic growth.
The IMF MD shared her institution’s perspective on the ongoing programme with the premier, including the review process.
Source: Geo News
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Hitman
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I just hope the IMF too doesn't get bankrupt this way providing handouts to Pakistan.
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ppl of Pakistan will surely get bankrupt this way how govt taking loans from IMF.
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IMF mission to arrive in Pakistan in May for new loan
Sources told ARY News that Pakistan and the international lender have scheduled talks on a new loan programme. The talks will take place in two phases, with technical-level discussions followed by policy-level negotiations.
Pakistan faces significant economic challenges ahead of the new talks, including a failed tax amnesty scheme proposed by the IMF.
The federal government had promised to bring 3.1 million traders into the tax net under the scheme, but it has been unsuccessful. The Federal Board of Revenue (FBR) is facing an unusual situation after the recent changes in senior officials.
The new and relatively inexperienced FBR team will negotiate with the IMF, which will be a challenge. The IMF will also be concerned about the recent decline in FBR’s tax collections.
The failure to achieve the primary budget surplus target in the first nine months will also be on the agenda for the talks, sources added.
The development comes a day after Pakistan received the much-awaited $1.1 billion final tranche from IMF as part of the $3 billion standby arrangement.
The SBP said it received Special Drawing Rights (SDR) 828 million — equivalent to $1.1 billion in value — “following the successful completion of the second review by the Executive Board of IMF under Stand By Arrangement (SBA)”.
Pakistan is seeking a new long-term and larger IMF loan, with Finance Minister Muhammad Aurangzeb saying Islamabad could secure a staff-level agreement on the new program by early July.
Islamabad says it is seeking a loan over at least three years to help macroeconomic stability and execute a long-due and painful structural reforms, though Aurangzeb has declined to detail what seize of programme the country seeks. If secured, it would be the 24th IMF bailout for Pakistan.
arynews.tv
Sources told ARY News that Pakistan and the international lender have scheduled talks on a new loan programme. The talks will take place in two phases, with technical-level discussions followed by policy-level negotiations.
Pakistan faces significant economic challenges ahead of the new talks, including a failed tax amnesty scheme proposed by the IMF.
The federal government had promised to bring 3.1 million traders into the tax net under the scheme, but it has been unsuccessful. The Federal Board of Revenue (FBR) is facing an unusual situation after the recent changes in senior officials.
The new and relatively inexperienced FBR team will negotiate with the IMF, which will be a challenge. The IMF will also be concerned about the recent decline in FBR’s tax collections.
The failure to achieve the primary budget surplus target in the first nine months will also be on the agenda for the talks, sources added.
The development comes a day after Pakistan received the much-awaited $1.1 billion final tranche from IMF as part of the $3 billion standby arrangement.
The SBP said it received Special Drawing Rights (SDR) 828 million — equivalent to $1.1 billion in value — “following the successful completion of the second review by the Executive Board of IMF under Stand By Arrangement (SBA)”.
Pakistan is seeking a new long-term and larger IMF loan, with Finance Minister Muhammad Aurangzeb saying Islamabad could secure a staff-level agreement on the new program by early July.
Islamabad says it is seeking a loan over at least three years to help macroeconomic stability and execute a long-due and painful structural reforms, though Aurangzeb has declined to detail what seize of programme the country seeks. If secured, it would be the 24th IMF bailout for Pakistan.
IMF mission to arrive in Pakistan in May for new loan
ISLAMABAD: A mission of the International Monetary Fund (IMF) will arrive in Pakistan this month to discuss a new ‘long-term and larger’ loan programme,
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Budget targets to be set prior to IMF team’s arrival
The federal government aims to achieve budget targets before the anticipated arrival of the International Monetary Fund (IMF) review mission in Pakistan. Negotiations for a new loan program are expected to commence in mid-May.
Finance ministry sources said the ministries had been instructed to complete the targets before the negotiations on the new loan programme.
They added that the details would be given to the IMF delegation when all the important targets were met.
It has also been decided to have the budget strategy paper approved by the federal cabinet before the IMF review mission’s arrival in the country.
According to the sources, the finance ministry has started preparing the budget.
The targets for debt repayment, defence budget and tax collections will be set.
Besides, the development and ongoing budget targets will also be determined.
After successfully completing the short-term bailout package of $3 billion, a schedule was agreed between Pakistan and the IMF for negotiations on a new major loan programme.
The talks for a fresh bailout will most probably kick off in the middle of May when the IMF delegation is expected to arrive in the country.
The IMF team will stay in Islamabad for two weeks.
According to sources in the finance ministry, the main features of the upcoming bailout package of $6 to $8 billion will be determined in the negotiations with the IMF review mission.
However, they continued that the size of the new IMF programme would be determined in the upcoming talks.
There is also a possibility of a request from Pakistan to expand its programme through environmental financing on the lines of those of Bangladesh and Egypt.
The finalisation of the economic indicators and financial framework for the four-year programme will be discussed.
After talks with the IMF, the government is likely to present its next budget before parliament on June 6 or 7 this year.
More stringent measures are likely to be taken for financial stability in the upcoming budget.
The Washington-based lender has proposed pension reforms. It insists that the continuation of pensions for several generations is infeasible. A proposal to bring pensions into the tax net is also under consideration. It has been proposed that at a uniform rate of 10% percent should be imposed on all pensioners.
Apart from this, more stringent decisions will have to be taken to increase the prices of electricity as well as gas, expand the scope of taxes, and privatise loss-making state-run institutions.
Pakistan faces major economic challenges especially following the failure of its ‘Trader-Friendly Scheme’ under which all unregistered wholesalers, retailers, dealers, and shopkeepers had to register themselves by April 30.
In addition, the country will also have to satisfy the IMF on the Federal Board of Revenue’s (FBR) recent decline in tax collections.
The sources said entering a new IMF programme was inevitable.
The growing debt and its repayment is a major challenge. It is necessary to stay in the IMF programme until the country’s exports increase and local resources are created.
It has been decided to opt for a fresh IMF bailout to maintain balance payments and reserves.
The finance ministry sources said the market exchange rate was important to counter external financial
SOURCE: EXPRESS TRIBUNE
The federal government aims to achieve budget targets before the anticipated arrival of the International Monetary Fund (IMF) review mission in Pakistan. Negotiations for a new loan program are expected to commence in mid-May.
Finance ministry sources said the ministries had been instructed to complete the targets before the negotiations on the new loan programme.
They added that the details would be given to the IMF delegation when all the important targets were met.
It has also been decided to have the budget strategy paper approved by the federal cabinet before the IMF review mission’s arrival in the country.
According to the sources, the finance ministry has started preparing the budget.
The targets for debt repayment, defence budget and tax collections will be set.
Besides, the development and ongoing budget targets will also be determined.
After successfully completing the short-term bailout package of $3 billion, a schedule was agreed between Pakistan and the IMF for negotiations on a new major loan programme.
The talks for a fresh bailout will most probably kick off in the middle of May when the IMF delegation is expected to arrive in the country.
The IMF team will stay in Islamabad for two weeks.
According to sources in the finance ministry, the main features of the upcoming bailout package of $6 to $8 billion will be determined in the negotiations with the IMF review mission.
However, they continued that the size of the new IMF programme would be determined in the upcoming talks.
There is also a possibility of a request from Pakistan to expand its programme through environmental financing on the lines of those of Bangladesh and Egypt.
The finalisation of the economic indicators and financial framework for the four-year programme will be discussed.
After talks with the IMF, the government is likely to present its next budget before parliament on June 6 or 7 this year.
More stringent measures are likely to be taken for financial stability in the upcoming budget.
The Washington-based lender has proposed pension reforms. It insists that the continuation of pensions for several generations is infeasible. A proposal to bring pensions into the tax net is also under consideration. It has been proposed that at a uniform rate of 10% percent should be imposed on all pensioners.
Apart from this, more stringent decisions will have to be taken to increase the prices of electricity as well as gas, expand the scope of taxes, and privatise loss-making state-run institutions.
Pakistan faces major economic challenges especially following the failure of its ‘Trader-Friendly Scheme’ under which all unregistered wholesalers, retailers, dealers, and shopkeepers had to register themselves by April 30.
In addition, the country will also have to satisfy the IMF on the Federal Board of Revenue’s (FBR) recent decline in tax collections.
The sources said entering a new IMF programme was inevitable.
The growing debt and its repayment is a major challenge. It is necessary to stay in the IMF programme until the country’s exports increase and local resources are created.
It has been decided to opt for a fresh IMF bailout to maintain balance payments and reserves.
The finance ministry sources said the market exchange rate was important to counter external financial
SOURCE: EXPRESS TRIBUNE
Hitman
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Any idea how inflation has been there in the last few months?
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It is currently at 17.3 or 4% I guess. Lowest one in the last 2 years.
FearlessRoar
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US supports Pakistan’s efforts for IMF deal
The United States State Department said that Washington’s support, for Pakistan’s efforts to stabilise its economy including reaching a deal with the International Monetary Fund (IMF), was “unwavering”.
“When it comes to efforts to stabilise its economy, we support those efforts, including reaching an agreement with the IMF,” said the department’s spokesperson, Matthew Miller.
“Our support for Pakistan’s economic success is unwavering and we will continue to engage with them through technical engagements as well as through our trade and investment ties, all of which are priorities of our bilateral relationship,” he stated.
It is pertinent to mention here that a mission of the International Monetary Fund (IMF) will arrive in Pakistan this month to discuss a new ‘long-term and larger’ loan programme, sought to help government repay billions in debt due this year.
Sources told ARY News that Pakistan and the international lender have scheduled talks on a new loan programme. The talks will take place in two phases, with technical-level discussions followed by policy-level negotiations.
Pakistan faces significant economic challenges ahead of the new talks, including a failed tax amnesty scheme proposed by the IMF.
Recently, Pakistan received the much-awaited $1.1 billion final tranche from IMF as part of the $3 billion standby arrangement.
The SBP said it received Special Drawing Rights (SDR) 828 million — equivalent to $1.1 billion in value — “following the successful completion of the second review by the Executive Board of IMF under Stand By Arrangement (SBA)”.
Pakistan is seeking a new long-term and larger IMF loan, with Finance Minister Muhammad Aurangzeb saying Islamabad could secure a staff-level agreement on the new program by early July.
arynews.tv
The United States State Department said that Washington’s support, for Pakistan’s efforts to stabilise its economy including reaching a deal with the International Monetary Fund (IMF), was “unwavering”.
“When it comes to efforts to stabilise its economy, we support those efforts, including reaching an agreement with the IMF,” said the department’s spokesperson, Matthew Miller.
“Our support for Pakistan’s economic success is unwavering and we will continue to engage with them through technical engagements as well as through our trade and investment ties, all of which are priorities of our bilateral relationship,” he stated.
It is pertinent to mention here that a mission of the International Monetary Fund (IMF) will arrive in Pakistan this month to discuss a new ‘long-term and larger’ loan programme, sought to help government repay billions in debt due this year.
Sources told ARY News that Pakistan and the international lender have scheduled talks on a new loan programme. The talks will take place in two phases, with technical-level discussions followed by policy-level negotiations.
Pakistan faces significant economic challenges ahead of the new talks, including a failed tax amnesty scheme proposed by the IMF.
Recently, Pakistan received the much-awaited $1.1 billion final tranche from IMF as part of the $3 billion standby arrangement.
The SBP said it received Special Drawing Rights (SDR) 828 million — equivalent to $1.1 billion in value — “following the successful completion of the second review by the Executive Board of IMF under Stand By Arrangement (SBA)”.
Pakistan is seeking a new long-term and larger IMF loan, with Finance Minister Muhammad Aurangzeb saying Islamabad could secure a staff-level agreement on the new program by early July.
US supports Pakistan’s efforts for IMF deal
The United States State Department said that Washington's support, for Pakistan’s efforts to stabilise its economy including reaching a deal with the
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IMF says its mission will visit Pakistan this month to discuss new loan
An International Monetary Fund (IMF) mission is expected to visit Pakistan this month to discuss a new programme, the lender said on Sunday ahead of Islamabad beginning its annual budget-making process for the next financial year.
Pakistan last month completed short-term $3 billion programme, which helped stave off sovereign default, but the government of Prime Minister Shehbaz Sharif has stressed the need for a fresh, longer term programme.
“A mission is expected to visit Pakistan in May to discuss the FY25 budget, policies, and reforms under a potential new programme for the welfare of all Pakistanis,” the IMF said in an emailed response to Reuters.
Pakistan’s financial year runs from July to June and its budget for fiscal year 2025, the first by Sharif’s new government, has to be presented before June 30.
The IMF did not specify the dates of the visit, nor the size or duration of the programme.
“Accelerating reforms now is more important than the size of the program, which will be guided by the package of reform and balance of payments needs,” the IMF statement said.
Pakistan narrowly averted default last summer, and its $350 billion economy has stabilised after the completion of the last IMF programme, with inflation coming down to around 17% in April from a record high 38% last May.
An International Monetary Fund (IMF) mission is expected to visit Pakistan this month to discuss a new programme, the lender said on Sunday ahead of Islamabad beginning its annual budget-making process for the next financial year.
Pakistan last month completed short-term $3 billion programme, which helped stave off sovereign default, but the government of Prime Minister Shehbaz Sharif has stressed the need for a fresh, longer term programme.
“A mission is expected to visit Pakistan in May to discuss the FY25 budget, policies, and reforms under a potential new programme for the welfare of all Pakistanis,” the IMF said in an emailed response to Reuters.
Pakistan’s financial year runs from July to June and its budget for fiscal year 2025, the first by Sharif’s new government, has to be presented before June 30.
The IMF did not specify the dates of the visit, nor the size or duration of the programme.
“Accelerating reforms now is more important than the size of the program, which will be guided by the package of reform and balance of payments needs,” the IMF statement said.
Pakistan narrowly averted default last summer, and its $350 billion economy has stabilised after the completion of the last IMF programme, with inflation coming down to around 17% in April from a record high 38% last May.
IMF says its mission will visit Pakistan this month to discuss new loan
- Accelerating reforms now more important than size of programme, which will be guided by package of reform and balance of payments needs, lender says
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Their visit always creates more trouble for the ppl of Pakistan, so get ready for some more chaos in coming days.IMF says its mission will visit Pakistan this month to discuss new loan
An International Monetary Fund (IMF) mission is expected to visit Pakistan this month to discuss a new programme, the lender said on Sunday ahead of Islamabad beginning its annual budget-making process for the next financial year.
Pakistan last month completed short-term $3 billion programme, which helped stave off sovereign default, but the government of Prime Minister Shehbaz Sharif has stressed the need for a fresh, longer term programme.
“A mission is expected to visit Pakistan in May to discuss the FY25 budget, policies, and reforms under a potential new programme for the welfare of all Pakistanis,” the IMF said in an emailed response to Reuters.
Pakistan’s financial year runs from July to June and its budget for fiscal year 2025, the first by Sharif’s new government, has to be presented before June 30.
The IMF did not specify the dates of the visit, nor the size or duration of the programme.
“Accelerating reforms now is more important than the size of the program, which will be guided by the package of reform and balance of payments needs,” the IMF statement said.
Pakistan narrowly averted default last summer, and its $350 billion economy has stabilised after the completion of the last IMF programme, with inflation coming down to around 17% in April from a record high 38% last May.
IMF says its mission will visit Pakistan this month to discuss new loan
- Accelerating reforms now more important than size of programme, which will be guided by package of reform and balance of payments needs, lender sayswww.brecorder.com
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Yep, IMF will demand more and more taxes and the Pakistan gov. will keep on begging on their knees for more money without providing any relief to the poor people of this country. Doom is imminent.
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IMF demands Rs1.3tr in new taxes
The International Monetary Fund (IMF) has asked Pakistan to impose additional taxes of around Rs1.3 trillion in the next budget which, if accepted, would take the Federal Board of Revenue’s (FBR) annual target to a whopping Rs12.3 trillion.
The Rs1.3 trillion additional taxes are equal to 1% of the size of the next year’s economy.
The global lender is asking to recover half of the additional taxes from salaried and business individuals, the government sources told The Express Tribune.
The sources said that the IMF shared its final Tax Diagnostic report with the government in which it has retained the recommendation that deals with reducing the number of income tax slabs for the salaried individuals to four. If the government accepts the recommendation, it will massively increase tax burden on the salaried and business individuals.
The sources said discussions on the IMF’s demand for the additional taxes of around Rs1.3 trillion or 1% of GDP would take place during the upcoming mission-level talks with the IMF for the next bailout package.
They said that the IMF’s demand for the Rs1.3 trillion new taxes was not the final verdict and the government would negotiate with the lender, particularly about the IMF’s insistence on putting additional burden on the salaried class.
The IMF and the government have milked the salaried class to an extent that the middle-class segment of society has started rationing its expenditure.
On Monday, the authorities concerned began internal discussions on the budget for fiscal year 2024-25 in the light of the IMF visit. The government had also been informed that the current fiscal year’s Rs9.415 trillion tax collection target was no longer achievable.
The tax authorities informed the government that its collection may fall short of the annual target by around Rs175 billion to Rs200 billion. This is the amount that is stuck in courts after petitioners challenged the government’s super tax, tax on real estate and windfall gains made by commercial banks.
Out of the Rs415 billion additional tax measures that the PDM government had taken in the previous budget, nearly half of it is now stuck in the courts, which reflects badly on the budget-making exercise.
The sources said that the FBR informed Finance Minister Muhammad Aurangzeb that it can show a 19% increase in tax collection without taking any additional revenue measures. The actual collection is expected to be around Rs9.2 trillion in this fiscal year. The tax authorities told the minister that without the additional revenue measures; the FBR can collect nearly Rs11 trillion in the next fiscal year.
But in order to increase the FBR’s tax-to-GDP ratio to 10% in the next fiscal year, the target has to be around Rs12.3 trillion.
If the government accepts the IMF’s demand for little under Rs1.3 trillion tax measures, the FBR’s target for the next year will be around Rs12.3 trillion. This requires a 33% increase over this year’s collection. In absolute terms, the FBR’s collection target might be around Rs3.1 trillion higher than this fiscal year –- a sum that the IMF and the government want to milk from an already depressed economy.
The government has discussed potential areas of taxation in the next fiscal year. These include collecting more taxes from retailers, withdrawal of sales tax exemptions, including on agriculture inputs and machinery, and ending reduced sales tax rates for the businesses registered with the FBR through point of sale (POS), said the sources.
The government charges 15% sales tax on the sales made by garments-related businesses registered with the FBR through POS. The idea is to increase it to the standard 18%. The tax rate had been kept lower to encourage businesses to get registered with the FBR. In the last budget, it was increased from 12% to 18%.
The government is eying withdrawal of tax exemptions and increase tax burden at a time when the FBR has started facing problems in achieving its monthly collection and people are buried under 25% inflation.
The FBR has missed its 10-month tax collection target by a margin of Rs52 billion. It could pool Rs7.362 trillion as against the goal of Rs7.414 trillion. The collection was Rs15 billion less than even the FBR’s own expectation -–a shortfall that the administration attributes to the go-slow policy adopted by the officers against the prime minister’s move to remove the compromised and inefficient officials.
The FBR missed its monthly target by Rs57 billion as it could only pool Rs650 billion in April.
In a meeting with a foreign bank delegation, Muhammad Aurangzeb stressed upon broadening the tax base and expediting the digitisation process of the FBR, according to the finance ministry.
SOURCE: EXPRESS TRIBUNE
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IMF demands Rs1.3tr in new taxes
The International Monetary Fund (IMF) has asked Pakistan to impose additional taxes of around Rs1.3 trillion in the next budget which, if accepted, would take the Federal Board of Revenue’s (FBR) annual target to a whopping Rs12.3 trillion.
The Rs1.3 trillion additional taxes are equal to 1% of the size of the next year’s economy.
The global lender is asking to recover half of the additional taxes from salaried and business individuals, the government sources told The Express Tribune.
The sources said that the IMF shared its final Tax Diagnostic report with the government in which it has retained the recommendation that deals with reducing the number of income tax slabs for the salaried individuals to four. If the government accepts the recommendation, it will massively increase tax burden on the salaried and business individuals.
The sources said discussions on the IMF’s demand for the additional taxes of around Rs1.3 trillion or 1% of GDP would take place during the upcoming mission-level talks with the IMF for the next bailout package.
They said that the IMF’s demand for the Rs1.3 trillion new taxes was not the final verdict and the government would negotiate with the lender, particularly about the IMF’s insistence on putting additional burden on the salaried class.
The IMF and the government have milked the salaried class to an extent that the middle-class segment of society has started rationing its expenditure.
On Monday, the authorities concerned began internal discussions on the budget for fiscal year 2024-25 in the light of the IMF visit. The government had also been informed that the current fiscal year’s Rs9.415 trillion tax collection target was no longer achievable.
The tax authorities informed the government that its collection may fall short of the annual target by around Rs175 billion to Rs200 billion. This is the amount that is stuck in courts after petitioners challenged the government’s super tax, tax on real estate and windfall gains made by commercial banks.
Out of the Rs415 billion additional tax measures that the PDM government had taken in the previous budget, nearly half of it is now stuck in the courts, which reflects badly on the budget-making exercise.
The sources said that the FBR informed Finance Minister Muhammad Aurangzeb that it can show a 19% increase in tax collection without taking any additional revenue measures. The actual collection is expected to be around Rs9.2 trillion in this fiscal year. The tax authorities told the minister that without the additional revenue measures; the FBR can collect nearly Rs11 trillion in the next fiscal year.
But in order to increase the FBR’s tax-to-GDP ratio to 10% in the next fiscal year, the target has to be around Rs12.3 trillion.
If the government accepts the IMF’s demand for little under Rs1.3 trillion tax measures, the FBR’s target for the next year will be around Rs12.3 trillion. This requires a 33% increase over this year’s collection. In absolute terms, the FBR’s collection target might be around Rs3.1 trillion higher than this fiscal year –- a sum that the IMF and the government want to milk from an already depressed economy.
The government has discussed potential areas of taxation in the next fiscal year. These include collecting more taxes from retailers, withdrawal of sales tax exemptions, including on agriculture inputs and machinery, and ending reduced sales tax rates for the businesses registered with the FBR through point of sale (POS), said the sources.
The government charges 15% sales tax on the sales made by garments-related businesses registered with the FBR through POS. The idea is to increase it to the standard 18%. The tax rate had been kept lower to encourage businesses to get registered with the FBR. In the last budget, it was increased from 12% to 18%.
The government is eying withdrawal of tax exemptions and increase tax burden at a time when the FBR has started facing problems in achieving its monthly collection and people are buried under 25% inflation.
The FBR has missed its 10-month tax collection target by a margin of Rs52 billion. It could pool Rs7.362 trillion as against the goal of Rs7.414 trillion. The collection was Rs15 billion less than even the FBR’s own expectation -–a shortfall that the administration attributes to the go-slow policy adopted by the officers against the prime minister’s move to remove the compromised and inefficient officials.
The FBR missed its monthly target by Rs57 billion as it could only pool Rs650 billion in April.
In a meeting with a foreign bank delegation, Muhammad Aurangzeb stressed upon broadening the tax base and expediting the digitisation process of the FBR, according to the finance ministry.
SOURCE: EXPRESS TRIBUNE
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Political uncertainty threatens economy: IMF
While noting that the government has delayed implementation of some reforms, the International Monetary Fund (IMF) on Friday said high political uncertainty and resurgence of social tensions due to a complex political scene could undermine execution of economic stabilization policies.
The IMF in its last staff level report on the outcomes of the $3 billion Stand-by Arrangement (SBA) appreciated Pakistan’s strong performance in achieving key goals. However, it also highlighted the risks mainly stemming from political tensions and exceptionally high level of external financing requirements.
“Downside risks remain exceptionally high. While the new government has indicated its intention to continue the SBA’s policies, political uncertainty remains significant,” said the IMF.
It further added that “the resurgence in social tensions reflecting the complex political scene and high cost of living could weigh on policy and reform implementation”.
The IMF said while Pakistan did “broadly achieve its narrow objectives, the challenges ahead remained uncomfortably high and would require sustained efforts to effectively address them”.
Pakistan’s fiscal and external vulnerabilities remain very high, including debt sustainability and refinancing risks. The IMF said restoring external viability was critical to ensure Pakistan’s capacity to repay the Fund, and hinges on strong policy implementation
Pakistan was also facing risks related to credit concentration, capacity to repay, reputation and engagement, sociopolitical tensions, and the security situation, it added.
Gross debt-service obligations remain substantial, and current account imbalances stemming from insufficient exchange rate flexibility and import restrictions may require additional policy adjustment to reach external equilibrium, it added.
Delay in Reforms
“Implementation of some reforms started by the caretaker government have been delayed, and renewed efforts are needed to expedite their execution,” said the IMF.
The anticipated launch of a scheme to register retailers and enforce filing and collection of their tax obligations, initially scheduled for January 1, 2024, has been postponed.
As of May 8, the FBR had registered 637 retailers –a figure that was mere 75 on April 30.
The IMF said Pakistan’s plans to transform the FBR into a semi-autonomous revenue authority have also been delayed so that an international consulting firm can be engaged for final reforms.
The government has hired Mackenzie consultancy firm for a three-year period in return for over $4.2 million fee –a sum that the Bills and Melinda Gates Foundation will pay, said a senior FBR official.
Debt risks
The report’s language suggested that the debt sustainability remains a concern for the global lender. It said policy slippages, together with lower external financing, could undermine the narrow path to debt sustainability and place pressure on the exchange rate.
The IMF said the risks to debt sustainability remain acute given very large gross financing needs and the persistent challenges in obtaining external financing. It said real interest rates are projected to become an adverse driver of debt dynamics in the coming years.
Despite the IMF programme, the gross reserves remain around $8 billion. The IMF admitted that the SBP’s foreign currency purchases helped offset ongoing debt service payments.
The Express Tribune had reported that the central bank purchased $5 billion to $5.5 billion from the open market as of last month.
The IMF has cut Pakistan’s current account deficit projection to $3 billion for this fiscal year –a figure that is over $3 billion less than its original estimates at the start of the last programme.
The over estimations of the current account deficit always put undue pressure on Pakistan in the shape of arranging more foreign loans. Former finance minister Ishaq Dar—who currently serves as the deputy prime minister— has always remained critical of the IMF’s wrong estimation. Dar used to believe that the IMF put undue pressure on Pakistan by exaggerating the current account deficit projections.
The IMF management should take note of the wrong current account deficit estimations by the IMF staff that have gone off the mark by more than 100%, a government functionary said on the condition of anonymity.
However, the IMF said without import payment restrictions, the current account deficit would have been larger, requiring additional real exchange rate depreciation in order to bring the current account back to equilibrium.
It added that Pakistan should allow the exchange rate to act as a buffer for shocks and refrain from any restrictions on import payments, which could artificially compress the current account.
There is also a need for fiscal tightening to alleviate real exchange rate appreciation pressures, as well as structural reforms to boost productivity and competitiveness, it added.
The IMF has once again flagged the issue of transparency in the working of the Special Investment Facilitation Council (SIFC).
“The SIFC created in August 2023, aimed at attracting and facilitating investment in Pakistan, requires safeguards to bring projects identified through the SIFC under Pakistan’s existing Public Investment Management Assessment framework to ensure accountability and transparency,” it said.
This is particularly important given the SIFC’s power to offer regulatory relief and other immunities and the centrality of a level playing field for all investors, it added.
SOURCE: EXPRESS TRIBUNE
While noting that the government has delayed implementation of some reforms, the International Monetary Fund (IMF) on Friday said high political uncertainty and resurgence of social tensions due to a complex political scene could undermine execution of economic stabilization policies.
The IMF in its last staff level report on the outcomes of the $3 billion Stand-by Arrangement (SBA) appreciated Pakistan’s strong performance in achieving key goals. However, it also highlighted the risks mainly stemming from political tensions and exceptionally high level of external financing requirements.
“Downside risks remain exceptionally high. While the new government has indicated its intention to continue the SBA’s policies, political uncertainty remains significant,” said the IMF.
It further added that “the resurgence in social tensions reflecting the complex political scene and high cost of living could weigh on policy and reform implementation”.
The IMF said while Pakistan did “broadly achieve its narrow objectives, the challenges ahead remained uncomfortably high and would require sustained efforts to effectively address them”.
Pakistan’s fiscal and external vulnerabilities remain very high, including debt sustainability and refinancing risks. The IMF said restoring external viability was critical to ensure Pakistan’s capacity to repay the Fund, and hinges on strong policy implementation
Pakistan was also facing risks related to credit concentration, capacity to repay, reputation and engagement, sociopolitical tensions, and the security situation, it added.
Gross debt-service obligations remain substantial, and current account imbalances stemming from insufficient exchange rate flexibility and import restrictions may require additional policy adjustment to reach external equilibrium, it added.
Delay in Reforms
“Implementation of some reforms started by the caretaker government have been delayed, and renewed efforts are needed to expedite their execution,” said the IMF.
The anticipated launch of a scheme to register retailers and enforce filing and collection of their tax obligations, initially scheduled for January 1, 2024, has been postponed.
As of May 8, the FBR had registered 637 retailers –a figure that was mere 75 on April 30.
The IMF said Pakistan’s plans to transform the FBR into a semi-autonomous revenue authority have also been delayed so that an international consulting firm can be engaged for final reforms.
The government has hired Mackenzie consultancy firm for a three-year period in return for over $4.2 million fee –a sum that the Bills and Melinda Gates Foundation will pay, said a senior FBR official.
Debt risks
The report’s language suggested that the debt sustainability remains a concern for the global lender. It said policy slippages, together with lower external financing, could undermine the narrow path to debt sustainability and place pressure on the exchange rate.
The IMF said the risks to debt sustainability remain acute given very large gross financing needs and the persistent challenges in obtaining external financing. It said real interest rates are projected to become an adverse driver of debt dynamics in the coming years.
Despite the IMF programme, the gross reserves remain around $8 billion. The IMF admitted that the SBP’s foreign currency purchases helped offset ongoing debt service payments.
The Express Tribune had reported that the central bank purchased $5 billion to $5.5 billion from the open market as of last month.
The IMF has cut Pakistan’s current account deficit projection to $3 billion for this fiscal year –a figure that is over $3 billion less than its original estimates at the start of the last programme.
The over estimations of the current account deficit always put undue pressure on Pakistan in the shape of arranging more foreign loans. Former finance minister Ishaq Dar—who currently serves as the deputy prime minister— has always remained critical of the IMF’s wrong estimation. Dar used to believe that the IMF put undue pressure on Pakistan by exaggerating the current account deficit projections.
The IMF management should take note of the wrong current account deficit estimations by the IMF staff that have gone off the mark by more than 100%, a government functionary said on the condition of anonymity.
However, the IMF said without import payment restrictions, the current account deficit would have been larger, requiring additional real exchange rate depreciation in order to bring the current account back to equilibrium.
It added that Pakistan should allow the exchange rate to act as a buffer for shocks and refrain from any restrictions on import payments, which could artificially compress the current account.
There is also a need for fiscal tightening to alleviate real exchange rate appreciation pressures, as well as structural reforms to boost productivity and competitiveness, it added.
The IMF has once again flagged the issue of transparency in the working of the Special Investment Facilitation Council (SIFC).
“The SIFC created in August 2023, aimed at attracting and facilitating investment in Pakistan, requires safeguards to bring projects identified through the SIFC under Pakistan’s existing Public Investment Management Assessment framework to ensure accountability and transparency,” it said.
This is particularly important given the SIFC’s power to offer regulatory relief and other immunities and the centrality of a level playing field for all investors, it added.
SOURCE: EXPRESS TRIBUNE
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IMF urges Pakistan to tax pensioners
The International Monetary Fund (IMF) has asked Pakistan to tax civilian and military pensioners and withdraw income tax exemptions from various pension schemes, as the Fund’s mission quietly lands in Islamabad to begin negotiations for two bailout packages.
The global lender’s demand to tax pensions is part of a host of recommendations it has put forth for inclusion in the upcoming budget.
The IMF has asked Pakistan to recover additional taxes equal to 0.5% of the Gross Domestic Product (GDP) or around Rs600 billion from salaried and business individuals.
If the government accepts the IMF’s demand to tax retiring and retired individuals, it will receive additional income tax ranging from Rs22 billion to Rs25 billion per annum after withdrawing all tax exemptions, including those on various pension funds.
Sources reveal that an IMF team arrived on Thursday for negotiations on one to two bailout packages. The team will engage with Pakistani authorities starting today (Friday), with the remaining members, including Mission Chief Nathan Porter, expected to arrive next week.
Finance Minister Muhammad Aurangzeb stated two days ago that IMF talks for the long and large programme would begin within seven to 10 days. However, negotiations have commenced within 72 hours of his public statement.
The finance minister did not respond to inquiries about whether the IMF accelerated the review talks following his public statement.
Pakistan is seeking two separate loan programmes; the Extended Fund Facility (EFF) for structural reforms and the Resilience and Sustainability Facility (RSF) to address climate change-related challenges. This marks the 24th bailout package, indicating that both the IMF and successive Pakistani governments have failed to achieve the objectives of previous bailout packages.
The finance minister mentioned two days ago that the size and duration of the IMF programme were not yet finalised, and it would take some time to finalise the RSF facility.
A finance ministry official suggested that talks might be held for both facilities simultaneously.
IMF Resident Representative Esther Perez did not respond to a request for comments.
Pakistan’s annual financing requirements remain in the range of $25 billion to $30 billion, placing a heavy burden on the government.
Government sources indicate that the 24th programme is expected to be one of the toughest Pakistan has ever signed. They said the IMF will heavily focus on enhancing the Federal Board of Revenue’s (FBR) revenues, with new taxes amounting to Rs1.3 trillion proposed, with half aimed at salaried individuals.
The sources said that the IMF has recommended that Pakistan eliminate income tax exemptions enjoyed by pensioners and tax their pensions and gratuity starting from the new fiscal year, commencing in July. Additionally, the IMF proposes ending income tax credits for voluntary payments to workers’ participation funds.
These measures may adversely affect Pakistan’s already marginalised fixed-income population, which has been grappling with double-digit inflation for an extended period. Despite the erosion of their purchasing power, salaried individuals and pensioners have little influence. Salaried individuals have seen a steady rise in their tax burden over the years despite a fast erosion of purchasing power.
The IMF has also advised Pakistan to review the income tax and pension regimes of sole proprietors who benefit from social security and pension contributions.
In the last budget, the government increased the burden on pensioners by taxing contributions to private-funded gratuity and pension schemes.
Sources estimate the annual cost of income tax exemptions for retired government servants and military personnel to be over Rs12 billion. The tax exemption on pension commutation received from the government or under any pension scheme could also be withdrawn, generating an estimated revenue of close to Rs4 billion.
Similarly, if the recommendation is accepted, the gratuity or pension commutation by an employee upon retirement or by their heirs in case of death will also be taxed, generating an estimated annual revenue of Rs900 million based on last fiscal year’s figures.
The tax credit for contributions to approved Pension Funds might also be withdrawn, generating approximately Rs2 billion in annual revenues. Additionally, any pension received by a Pakistani citizen from a former employer is proposed to be taxed, generating another Rs2 billion.
Voluntary participants in pension funds, pensioners receiving monthly instalments from an income payment plan, and pensioners withdrawing any amount from their approved pension funds are also proposed to be taxed.
Similarly, any income from a Pension Fund approved by the Securities and Exchange Commission of Pakistan (SECP) is proposed to be taxed. If accepted, the pension funds of Punjab, Sindh, and Khyber-Pakhtunkhwa may also be subject to income tax, potentially yielding Rs6 billion to Rs8 billion per annum.
Sources suggest that pensioners who have invested in the Behbood Savings Certificate and Benefit Account and Shuhadas Family Welfare Account might also come under scrutiny.
IMF urges Pakistan to tax pensioners | The Express Tribune
If govt accepts taxing retirees, it could gain additional Rs22-25b annually
tribune.com.pk
Bewal Express
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The mafia stole a cool billion from the wheat scandal and shafted the poor farmers. Meanwhile Establishment quotes the Koran like actually believes it. There is no investigation into this scam which he is a beneficiary of. That billion is what we are begging the IMF for every quarter. When will the mafia rule end?IMF urges Pakistan to tax pensioners
The International Monetary Fund (IMF) has asked Pakistan to tax civilian and military pensioners and withdraw income tax exemptions from various pension schemes, as the Fund’s mission quietly lands in Islamabad to begin negotiations for two bailout packages.
The global lender’s demand to tax pensions is part of a host of recommendations it has put forth for inclusion in the upcoming budget.
The IMF has asked Pakistan to recover additional taxes equal to 0.5% of the Gross Domestic Product (GDP) or around Rs600 billion from salaried and business individuals.
If the government accepts the IMF’s demand to tax retiring and retired individuals, it will receive additional income tax ranging from Rs22 billion to Rs25 billion per annum after withdrawing all tax exemptions, including those on various pension funds.
Sources reveal that an IMF team arrived on Thursday for negotiations on one to two bailout packages. The team will engage with Pakistani authorities starting today (Friday), with the remaining members, including Mission Chief Nathan Porter, expected to arrive next week.
Finance Minister Muhammad Aurangzeb stated two days ago that IMF talks for the long and large programme would begin within seven to 10 days. However, negotiations have commenced within 72 hours of his public statement.
The finance minister did not respond to inquiries about whether the IMF accelerated the review talks following his public statement.
Pakistan is seeking two separate loan programmes; the Extended Fund Facility (EFF) for structural reforms and the Resilience and Sustainability Facility (RSF) to address climate change-related challenges. This marks the 24th bailout package, indicating that both the IMF and successive Pakistani governments have failed to achieve the objectives of previous bailout packages.
The finance minister mentioned two days ago that the size and duration of the IMF programme were not yet finalised, and it would take some time to finalise the RSF facility.
A finance ministry official suggested that talks might be held for both facilities simultaneously.
IMF Resident Representative Esther Perez did not respond to a request for comments.
Pakistan’s annual financing requirements remain in the range of $25 billion to $30 billion, placing a heavy burden on the government.
Government sources indicate that the 24th programme is expected to be one of the toughest Pakistan has ever signed. They said the IMF will heavily focus on enhancing the Federal Board of Revenue’s (FBR) revenues, with new taxes amounting to Rs1.3 trillion proposed, with half aimed at salaried individuals.
The sources said that the IMF has recommended that Pakistan eliminate income tax exemptions enjoyed by pensioners and tax their pensions and gratuity starting from the new fiscal year, commencing in July. Additionally, the IMF proposes ending income tax credits for voluntary payments to workers’ participation funds.
These measures may adversely affect Pakistan’s already marginalised fixed-income population, which has been grappling with double-digit inflation for an extended period. Despite the erosion of their purchasing power, salaried individuals and pensioners have little influence. Salaried individuals have seen a steady rise in their tax burden over the years despite a fast erosion of purchasing power.
The IMF has also advised Pakistan to review the income tax and pension regimes of sole proprietors who benefit from social security and pension contributions.
In the last budget, the government increased the burden on pensioners by taxing contributions to private-funded gratuity and pension schemes.
Sources estimate the annual cost of income tax exemptions for retired government servants and military personnel to be over Rs12 billion. The tax exemption on pension commutation received from the government or under any pension scheme could also be withdrawn, generating an estimated revenue of close to Rs4 billion.
Similarly, if the recommendation is accepted, the gratuity or pension commutation by an employee upon retirement or by their heirs in case of death will also be taxed, generating an estimated annual revenue of Rs900 million based on last fiscal year’s figures.
The tax credit for contributions to approved Pension Funds might also be withdrawn, generating approximately Rs2 billion in annual revenues. Additionally, any pension received by a Pakistani citizen from a former employer is proposed to be taxed, generating another Rs2 billion.
Voluntary participants in pension funds, pensioners receiving monthly instalments from an income payment plan, and pensioners withdrawing any amount from their approved pension funds are also proposed to be taxed.
Similarly, any income from a Pension Fund approved by the Securities and Exchange Commission of Pakistan (SECP) is proposed to be taxed. If accepted, the pension funds of Punjab, Sindh, and Khyber-Pakhtunkhwa may also be subject to income tax, potentially yielding Rs6 billion to Rs8 billion per annum.
Sources suggest that pensioners who have invested in the Behbood Savings Certificate and Benefit Account and Shuhadas Family Welfare Account might also come under scrutiny.
IMF urges Pakistan to tax pensioners | The Express Tribune
If govt accepts taxing retirees, it could gain additional Rs22-25b annually
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Mafia's rule will end the day this nation will be out of illiteracy
Bewal Express
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So the establishment and their puppets won't hold us hostage. Are you sure because they can't accept any independent thought and see PKs as the enemy.
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Bewal Express
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BTW
We all know who is establishment and how it works, IK has used his name, so why can't we especially as he says I am the Idaara
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We need to provide the current establishment a safe exit and allow a competent group to take its place, as we all know that no country can function without a stable establishment.
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They don't want a safe exit, they want to rule forever with full benefits and the power of life and death. They are slow poisoning IK and the next few months we will see the tragedy that is about to unfold on PK. But they will see this as a "victory", and we will see it as disaster.
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Lender endorses status quo in SBP’s policy rate
The International Monetary Fund (IMF) has endorsed the State Bank of Pakistan’s (SBP) decision to keep the interest rate unchanged despite a sharp deceleration in inflation.
The IMF-Pakistan SBA (2nd and Final Review) Country Report made it clear that the Fund was willing to see no change in the interest rate despite demand from the stakeholders in the wake of falling inflation, which has widened the gap between the 22 per cent interest rate and expected 13 to 15pc estimated CPI in May.
“The IMF staff endorsed the SBP’s Monetary Policy Committee decision to maintain the policy rate,” said the report.
It is believed that the unprecedented interest rate has crippled economic growth, which is estimated to expand at 2pc in FY24 after contracting in FY23.
Most analysts and research houses believe that inflation in May is likely to be between 13 and 15pc, providing enough room to bring down the interest rate. However, the IMF’s endorsement of SBP’s decision to maintain a status quo indicates that it may be kept steady despite an expected gap of about 7 to 9pc between inflation and the policy rate.
The IMF report further said that any relaxation of the policy stance should be justified by evidence of declining inflation, controlled pass-through effects, and limited exchange rate pressures from forex market normalisation.
“The authorities remain committed to a flexible exchange rate and transparent interbank FX market,” said the report.
The IMF recommended the continued proactive accumulation of reserves through interbank purchases, noting positively that the reduction of the SBP’s swap/forward position has alleviated forward premia compression, said the report.
The IMF also cautioned that the recent stability of the rupee should not lead to expectations of its persistence in the future.
Reforms for the sustainability of the power sector require solid cost-side reforms. The authorities need to speed up work on improving transmission and distribution infrastructure, Discos’ performance via privatisation or long-term management concession, moving captive demand to the national grid, revisiting terms of PPA where feasible, and converting Power Holding Private Ltd debt into cheaper public debt.
SOURCE: DAWN
The International Monetary Fund (IMF) has endorsed the State Bank of Pakistan’s (SBP) decision to keep the interest rate unchanged despite a sharp deceleration in inflation.
The IMF-Pakistan SBA (2nd and Final Review) Country Report made it clear that the Fund was willing to see no change in the interest rate despite demand from the stakeholders in the wake of falling inflation, which has widened the gap between the 22 per cent interest rate and expected 13 to 15pc estimated CPI in May.
“The IMF staff endorsed the SBP’s Monetary Policy Committee decision to maintain the policy rate,” said the report.
It is believed that the unprecedented interest rate has crippled economic growth, which is estimated to expand at 2pc in FY24 after contracting in FY23.
Most analysts and research houses believe that inflation in May is likely to be between 13 and 15pc, providing enough room to bring down the interest rate. However, the IMF’s endorsement of SBP’s decision to maintain a status quo indicates that it may be kept steady despite an expected gap of about 7 to 9pc between inflation and the policy rate.
The IMF report further said that any relaxation of the policy stance should be justified by evidence of declining inflation, controlled pass-through effects, and limited exchange rate pressures from forex market normalisation.
“The authorities remain committed to a flexible exchange rate and transparent interbank FX market,” said the report.
The IMF recommended the continued proactive accumulation of reserves through interbank purchases, noting positively that the reduction of the SBP’s swap/forward position has alleviated forward premia compression, said the report.
The IMF also cautioned that the recent stability of the rupee should not lead to expectations of its persistence in the future.
Reforms for the sustainability of the power sector require solid cost-side reforms. The authorities need to speed up work on improving transmission and distribution infrastructure, Discos’ performance via privatisation or long-term management concession, moving captive demand to the national grid, revisiting terms of PPA where feasible, and converting Power Holding Private Ltd debt into cheaper public debt.
SOURCE: DAWN
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IMF delegation reaches Pakistan, talks to begin tomorrow: Aurangzeb
Finance Minister Muhammad Aurangzeb on Sunday said that the International Monetary Fund (IMF) team has reached Pakistan, and the two sides would begin talks for a new loan programme on Monday (tomorrow).
Addressing a pre-budget seminar, finance minister said that the private sector would have to lead and guide the country out of the difficult phase.
Finance minister also said that the FBR’s Track and Trace System has utterly failed and vowed to bring traders in the tax net.
In his speech, the finance minister covered a variety of subjects, including the rupee exchange rate and interest rates, which, he added, were determined by the State Bank of Pakistan.
He said the rupee’s exchange rate has stabilized and the inflation coming down.
He made it clear that the government would extend facilities to traders but would remain on track to expand tax net.
The finance minister said the steps would be taken for improving tax-to-GDP ratio, swift privatisation of lossmaking state-owned enterprises (SOEs) and overhauling the energy sector.
He said that the power theft will be strictly dealt with adding that the private sector will be given representation in Discos boards.
arynews.tv
Finance Minister Muhammad Aurangzeb on Sunday said that the International Monetary Fund (IMF) team has reached Pakistan, and the two sides would begin talks for a new loan programme on Monday (tomorrow).
Addressing a pre-budget seminar, finance minister said that the private sector would have to lead and guide the country out of the difficult phase.
Finance minister also said that the FBR’s Track and Trace System has utterly failed and vowed to bring traders in the tax net.
In his speech, the finance minister covered a variety of subjects, including the rupee exchange rate and interest rates, which, he added, were determined by the State Bank of Pakistan.
He said the rupee’s exchange rate has stabilized and the inflation coming down.
He made it clear that the government would extend facilities to traders but would remain on track to expand tax net.
The finance minister said the steps would be taken for improving tax-to-GDP ratio, swift privatisation of lossmaking state-owned enterprises (SOEs) and overhauling the energy sector.
He said that the power theft will be strictly dealt with adding that the private sector will be given representation in Discos boards.
IMF delegation reaches Pakistan, talks to begin tomorrow: Aurangzeb
LAHORE: Finance Minister Muhammad Aurangzeb on Sunday said that the International Monetary Fund (IMF) team has reached Pakistan, and the two sides would
arynews.tv
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IMF has asked Pakistan to cut subsidies, not hike up energy prices: Senator Mandviwalla
The International Monetary Fund (IMF) has not asked Pakistan to hike up energy prices but does want it to withdraw subsidies granted in various sectors, including energy, according to Senator Saleem Mandviwalla.
IMF official Esther Perez Ruiz informed Dawn.com that a delegation from the lender will meet Pakistani authorities next week to discuss the “next phase of engagement”.
“A mission team led by Nathan Porter, IMF’s mission chief to Pakistan, will meet with authorities next week to discuss the next phase of engagement,” she said.
“The aim is to lay the foundation for better governance and stronger, more inclusive, and resilient economic growth that will benefit all Pakistanis,” she added.
Last week, the Fund said that a mission was expected to visit Pakistan this month to “discuss the FY25 budget, policies, and reforms under a potential new programme for the welfare of all Pakistanis”.
Speaking on Dawn News programme Doosra Rukh, Senator Mandviwalla said the IMF team will be in Pakistan on May 15 and stay in the country for two weeks, adding that he expects “things to be finalised” during that time.
“The IMF has not imposed any new conditions,” he said. “I do not see any hurdles nor disruption to the agreement.”
The senator added that the IMF has not asked Pakistan to increase or decrease the prices of petrol, gas or electricity. “Their main condition is that they (those commodities) are being sold in compliance with international standards,” he clarified.
He said the IMF has requested an end to subsidies in various sectors, including energy. “The IMF has instructed us not to give subsidies and to end those that have already been given,” Mandviwalla added.
“They haven’t told us to increase or decrease prices by a certain amount, but they have given us a formula,” he said.
In response to a question about the impact on the common man of cutting subsidies, Senator Mandviwalla said that the subsidies were only for “certain sectors” and that the public saw “very little benefit” from.
“The subsidies the IMF is talking about are only benefitting certain people, not the public at large,” the senator clarified, adding that the IMF has encouraged subsidies in other sectors and projects such as the Benazir Income Support Programme.
Regarding the budget, he admitted that it would be “difficult” to grant relief to the people in the next budget. “The government does not have enough space to provide relief to anyone.”
Mandviwalla said that the IMF team may want to meet the main opposition party, the PTI.
“My personal opinion is that the IMF will also meet the PTI. They try to speak with every party,” he said, adding that they will take their points of view and possibly ask for a commitment.
IMF has asked Pakistan to cut subsidies, not hike energy prices: Senator Mandviwalla
PPP Senator says subsidies cut will be for “certain sectors” that the public sees “very little benefit” from.
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Pakistan to finalise $8 bn deal with IMF by July, US Bank says
Citigroup (Citi), a prominent Wall Street bank, predicts that Pakistan will reach an agreement with the International Monetary Fund (IMF) for a new four-year program worth up to $8 billion by the end of July. In light of this, Citi recommends investors to take a bullish position on Pakistan’s 2027 international bond.
While Pakistan recently concluded a short-term $3 billion Stand-By Arrangement with the IMF, the government in Islamabad has emphasized the necessity for a longer-term program. Nikola Apostolov, an analyst at Citi, stated in a client note that despite long-term challenges, there are positive factors that support the Eurobonds.
Apostolov further mentioned that a larger and extended IMF Extended Fund Facility (EFF) program, potentially worth $7-8 billion over four years, could be finalized by July. Additionally, the influx of investments from Saudi Arabia is another potential catalyst for Pakistan’s economic prospects.
Citi’s team visited Pakistan and held discussions with policymakers, including Finance Minister Muhammad Aurangzeb.
The IMF is expected to send a mission to Pakistan to engage in talks regarding the fiscal year 2025 budget, policies, and reforms under a potential new program.
The aim of these discussions is to establish a foundation for improved governance and to foster stronger, more inclusive, and resilient economic growth that benefits all Pakistanis, as stated by IMF Resident Representative Ether Perez Ruiz.
In terms of investment opportunities, Citi believes that Pakistan’s international 2027 bond offers an attractive position for investors. With ample liquidity and significant upside potential as the risk of default diminishes, the 2027 maturity is currently trading at 87.292 cents on the dollar, according to Tradeweb data.
Pakistan’s shorter-dated bonds, maturing in 2025 and 2026, are trading at 91-96 cents following a substantial rally since the latter part of last year. It is worth noting that Pakistan’s international bonds had plummeted to as low as the mid-20 cents range in 2022.
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Citigroup (Citi), a prominent Wall Street bank, predicts that Pakistan will reach an agreement with the International Monetary Fund (IMF) for a new four-year program worth up to $8 billion by the end of July. In light of this, Citi recommends investors to take a bullish position on Pakistan’s 2027 international bond.
While Pakistan recently concluded a short-term $3 billion Stand-By Arrangement with the IMF, the government in Islamabad has emphasized the necessity for a longer-term program. Nikola Apostolov, an analyst at Citi, stated in a client note that despite long-term challenges, there are positive factors that support the Eurobonds.
Apostolov further mentioned that a larger and extended IMF Extended Fund Facility (EFF) program, potentially worth $7-8 billion over four years, could be finalized by July. Additionally, the influx of investments from Saudi Arabia is another potential catalyst for Pakistan’s economic prospects.
Citi’s team visited Pakistan and held discussions with policymakers, including Finance Minister Muhammad Aurangzeb.
The IMF is expected to send a mission to Pakistan to engage in talks regarding the fiscal year 2025 budget, policies, and reforms under a potential new program.
The aim of these discussions is to establish a foundation for improved governance and to foster stronger, more inclusive, and resilient economic growth that benefits all Pakistanis, as stated by IMF Resident Representative Ether Perez Ruiz.
In terms of investment opportunities, Citi believes that Pakistan’s international 2027 bond offers an attractive position for investors. With ample liquidity and significant upside potential as the risk of default diminishes, the 2027 maturity is currently trading at 87.292 cents on the dollar, according to Tradeweb data.
Pakistan’s shorter-dated bonds, maturing in 2025 and 2026, are trading at 91-96 cents following a substantial rally since the latter part of last year. It is worth noting that Pakistan’s international bonds had plummeted to as low as the mid-20 cents range in 2022.
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Pakistan-IMF shy away from calling talks ‘programme negotiations’
Pakistan on Monday shied away from labelling the ongoing talks with the International Monetary Fund (IMF) as programme negotiations and instead said that the discussions were taking place “on further engagement with the fund”.
The finance ministry has also not defined the further engagement, unlike in the past when it had stated that the country was keen to secure the Extended Fund Facility (EFF).
In an official handout, the ministry said that “the IMF mission led by Nathan Porter called on the Finance Minister to kick start the discussions on further engagement with the Fund”.
The visit has been overshadowed by unrest in Azad Jammu and Kashmir (AJK) and the consequent approval of the Rs23 billion unbudgeted subsidy by the prime minister of Pakistan to cool down the situation.
The approval of the subsidy is seen as weakening political will and an indication that the coalition government may not withstand any wide-scale public pressure that may emanate due to conditions of the next bailout package.
The language of the finance ministry’s press statement was similar to a statement issued by the IMF Resident Representative Esther Perez who also said on Saturday that Porter was meeting with Pakistani authorities “to discuss the next phase of engagement”.
The sources said that during the opening meeting, Nathan Porter raised the issue of the shortfall in tax revenues, and imbalances between the federal and provincial taxes coupled with political challenges that the government was facing.
The sources said that at this stage it was not clear whether the IMF mission would end with a formal staff-level agreement for the next bailout package. They added that the duration, instrument and size of the next IMF programme were open to discussions. Pakistan is keen to have at least a three-year programme.
Finance Minister Muhammad Aurangzeb did not respond to the questions of whether the current IMF mission arrived for programme negotiations under the Extended Fund Facility.
He also did not comment on whether the IMF mission was looking for both options of a shorter-term programme in light of the political and economic situation or was aimed at only the longer-duration programme under the EFF.
In its staff-level report, the IMF on Friday said high political uncertainty and resurgence of social tensions due to a complex political scene and high cost of living could undermine the execution of economic stabilisation policies.
The finance ministry handout stated that Muhammad Aurangzeb apprised the IMF team of the improvement in the macroeconomic indicators over the course of the SBA and underscored the government’s commitment to continue with and expand upon the reform agenda.
The sources said that Nathan Porter raised the issue of the shortfall in tax collection. He also pointed out the disparity in the federal and provincial taxation.
Days before arriving in Pakistan, the IMF had sent a report that will determine the future course of negotiations in case the IMF gives a loan to Pakistan.
The sources said that the IMF has asked Pakistan to expand the terms of reference of the National Tax Council to include the harmonisation of tax rates and bases for agricultural Income tax and property tax. Currently, these two issues are off the limits of the federal government.
The IMF has also urged the Pakistan authorities to encourage provincial governments to step up on the collection of provincial taxes and enforcement of provincial tax laws.
The split in taxing rights between the federal government and provinces poses challenges for tax policy making and revenue administration, according to the IMF. It added that the split of responsibilities for the sales tax on services and goods, which are typically part of the same value chain, causes confusion and distortions.
The IMF has been asking to bring harmony in the federal and provincial taxes and also review the administration of these taxes.
The IMF said that placement of some federal tax revenues in the divisible pool under the National Finance Commission creates distortions, where the federal government favours the collection of taxes that are not put in the divisible pool and provinces face a reduced incentive for maximising their own revenues.
The finance ministry sources said that the Prime Minister’s decision to announce the Rs23 billion subsidies for AJK consumers has weakened the government’s case in the eyes of the IMF.
The premier approved the immediate provision of Rs23 billion to AJK after the region witnessed clashes and protests in the past few days. The money will be used for giving subsidies for wheat and electricity.
After winning the subsidy from the federal government, the AJK prime minister announced that the wheat would be provided at Rs2,000 per 40 kilogram as against the existing rate of Rs3,100 per 40kg.
Similarly, the regional government also announced to charge only Rs3 per unit for 100 units of monthly consumption, Rs5 per unit from 101 to 300 units for consumers and Rs6 per unit will be charged to people using more than 500 units.
SOURCE: EXPRESS TRIBUNE
Pakistan on Monday shied away from labelling the ongoing talks with the International Monetary Fund (IMF) as programme negotiations and instead said that the discussions were taking place “on further engagement with the fund”.
The finance ministry has also not defined the further engagement, unlike in the past when it had stated that the country was keen to secure the Extended Fund Facility (EFF).
In an official handout, the ministry said that “the IMF mission led by Nathan Porter called on the Finance Minister to kick start the discussions on further engagement with the Fund”.
The visit has been overshadowed by unrest in Azad Jammu and Kashmir (AJK) and the consequent approval of the Rs23 billion unbudgeted subsidy by the prime minister of Pakistan to cool down the situation.
The approval of the subsidy is seen as weakening political will and an indication that the coalition government may not withstand any wide-scale public pressure that may emanate due to conditions of the next bailout package.
The language of the finance ministry’s press statement was similar to a statement issued by the IMF Resident Representative Esther Perez who also said on Saturday that Porter was meeting with Pakistani authorities “to discuss the next phase of engagement”.
The sources said that during the opening meeting, Nathan Porter raised the issue of the shortfall in tax revenues, and imbalances between the federal and provincial taxes coupled with political challenges that the government was facing.
The sources said that at this stage it was not clear whether the IMF mission would end with a formal staff-level agreement for the next bailout package. They added that the duration, instrument and size of the next IMF programme were open to discussions. Pakistan is keen to have at least a three-year programme.
Finance Minister Muhammad Aurangzeb did not respond to the questions of whether the current IMF mission arrived for programme negotiations under the Extended Fund Facility.
He also did not comment on whether the IMF mission was looking for both options of a shorter-term programme in light of the political and economic situation or was aimed at only the longer-duration programme under the EFF.
In its staff-level report, the IMF on Friday said high political uncertainty and resurgence of social tensions due to a complex political scene and high cost of living could undermine the execution of economic stabilisation policies.
The finance ministry handout stated that Muhammad Aurangzeb apprised the IMF team of the improvement in the macroeconomic indicators over the course of the SBA and underscored the government’s commitment to continue with and expand upon the reform agenda.
The sources said that Nathan Porter raised the issue of the shortfall in tax collection. He also pointed out the disparity in the federal and provincial taxation.
Days before arriving in Pakistan, the IMF had sent a report that will determine the future course of negotiations in case the IMF gives a loan to Pakistan.
The sources said that the IMF has asked Pakistan to expand the terms of reference of the National Tax Council to include the harmonisation of tax rates and bases for agricultural Income tax and property tax. Currently, these two issues are off the limits of the federal government.
The IMF has also urged the Pakistan authorities to encourage provincial governments to step up on the collection of provincial taxes and enforcement of provincial tax laws.
The split in taxing rights between the federal government and provinces poses challenges for tax policy making and revenue administration, according to the IMF. It added that the split of responsibilities for the sales tax on services and goods, which are typically part of the same value chain, causes confusion and distortions.
The IMF has been asking to bring harmony in the federal and provincial taxes and also review the administration of these taxes.
The IMF said that placement of some federal tax revenues in the divisible pool under the National Finance Commission creates distortions, where the federal government favours the collection of taxes that are not put in the divisible pool and provinces face a reduced incentive for maximising their own revenues.
The finance ministry sources said that the Prime Minister’s decision to announce the Rs23 billion subsidies for AJK consumers has weakened the government’s case in the eyes of the IMF.
The premier approved the immediate provision of Rs23 billion to AJK after the region witnessed clashes and protests in the past few days. The money will be used for giving subsidies for wheat and electricity.
After winning the subsidy from the federal government, the AJK prime minister announced that the wheat would be provided at Rs2,000 per 40 kilogram as against the existing rate of Rs3,100 per 40kg.
Similarly, the regional government also announced to charge only Rs3 per unit for 100 units of monthly consumption, Rs5 per unit from 101 to 300 units for consumers and Rs6 per unit will be charged to people using more than 500 units.
SOURCE: EXPRESS TRIBUNE
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IMF ‘asks’ Pakistan for privatisation of national entities
The IMF mission during talks expressed ‘concern’ over the increasing losses of the government-owned entities and summoned a fresh report regarding current losses, the sources said.
The Pakistani authorities assured the IMF mission of submission of the latest report within two days as the Central Monitoring Unit in the finance ministry is working on the report.
The IMF has reportedly asked Pakistan to take steps for privatization of the government-owned enterprises.
The International Monetary Fund (IMF) delegation is currently in Pakistan as Islamabad is interested in taking another programme from the international lender to address the finance shortage.
On Tuesday, Prime Minister Shehbaz Sharif announced to privatise all state-owned enterprises except for strategically important entities.
Chairing a review meeting on matters related to the Ministry of Privatization and Privatization Commission in Islamabad, the prime minister said apart from strategic state-owned enterprises, all other enterprises, whether profitable or loss-making, will be privatised.
In the meeting, the privatisation ministry and the Privatisation Commission presented a roadmap for the Privatisation Program 2024-29.
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The IMF mission during talks expressed ‘concern’ over the increasing losses of the government-owned entities and summoned a fresh report regarding current losses, the sources said.
The Pakistani authorities assured the IMF mission of submission of the latest report within two days as the Central Monitoring Unit in the finance ministry is working on the report.
The IMF has reportedly asked Pakistan to take steps for privatization of the government-owned enterprises.
The International Monetary Fund (IMF) delegation is currently in Pakistan as Islamabad is interested in taking another programme from the international lender to address the finance shortage.
On Tuesday, Prime Minister Shehbaz Sharif announced to privatise all state-owned enterprises except for strategically important entities.
Chairing a review meeting on matters related to the Ministry of Privatization and Privatization Commission in Islamabad, the prime minister said apart from strategic state-owned enterprises, all other enterprises, whether profitable or loss-making, will be privatised.
In the meeting, the privatisation ministry and the Privatisation Commission presented a roadmap for the Privatisation Program 2024-29.
IMF 'asks' Pakistan for privatisation of national entities
ISLAMABAD: The talks between Pakistan and the International Monetary Fund (IMF) for a fresh loan are underway in Islamabad, ARY News reported on
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IMF ‘dissatisfied’ with Pakistan’s steps of bringing real estate into tax net
The fifth round of talks is underway between Pakistan and IMF as the South Asian nation is seeking a fresh bailout package to address the balance of payments issue.
Sources privy to the development said, the IMF mission showed its consent on Pakistan’s proposal of increasing tax on the sale and purchase of plots for the non-filers.
In order to document the real estate sector, it has been proposed to use banking channels instead of cash transactions. Sources added that all records, including cutting and purchasing, of plots in housing societies will be registered.
Data of property agents and the sale and purchase of plots will be registered in the Federal Board of Revenue (FBR), sources added.
Sources claimed that measures would be taken in the upcoming budget to end undocumented transactions in the real estate sector. Furthermore, proposals to levy tax on transactions of files in the property sector will be prepared.
During the talks so far, the fund has reportedly demanded to jack up electricity and gas prices, and showed concern about the increasing losses of the state-owned entities.
arynews.tv
The fifth round of talks is underway between Pakistan and IMF as the South Asian nation is seeking a fresh bailout package to address the balance of payments issue.
Sources privy to the development said, the IMF mission showed its consent on Pakistan’s proposal of increasing tax on the sale and purchase of plots for the non-filers.
In order to document the real estate sector, it has been proposed to use banking channels instead of cash transactions. Sources added that all records, including cutting and purchasing, of plots in housing societies will be registered.
Data of property agents and the sale and purchase of plots will be registered in the Federal Board of Revenue (FBR), sources added.
Sources claimed that measures would be taken in the upcoming budget to end undocumented transactions in the real estate sector. Furthermore, proposals to levy tax on transactions of files in the property sector will be prepared.
During the talks so far, the fund has reportedly demanded to jack up electricity and gas prices, and showed concern about the increasing losses of the state-owned entities.
IMF 'dissatisfied' with Pakistan's steps of bringing real estate into tax net
ISLAMABAD: Pakistan has reportedly failed to convince the International Monetary Fund (IMF) on the steps to bring real estate sector into the tax net, ARY
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Still too early to talk about new loan: IMF
The International Monetary Fund (IMF) has said that it’s still too early to determine whether ongoing discussions with Pakistan will result in a new loan package.
During a news briefing in Washington on Thursday, the Fund’s Director of Communications Julie Kozack confirmed that an IMF delegation was currently in Islamabad, engaging in talks with Pakistani authorities.
She was asked if the talks could lead to a staff-level agreement on a new loan or if it was just a preliminary visit. The journalists also speculated if it was still too early to have a staff-level agreement.
“On Pakistan, given that there is a mission on the ground, we will wait for them to complete their work and we will communicate the findings of the mission in due course, including, I think, some answers to your questions.”
Ms Kozack provided an update on the Islamabad talks, noting that on April 29, the IMF Executive Board completed the second review of the Stand-by Arrangement for Pakistan, which enabled a disbursement of about $1.1 billion.
“The completion by our Board of the second and final review of the Stand-by Arrangement reflected the authorities’ strong policy efforts during the time of the standby, which did help stabilise the economy,” she said.
SOURCE: DAWN
The International Monetary Fund (IMF) has said that it’s still too early to determine whether ongoing discussions with Pakistan will result in a new loan package.
During a news briefing in Washington on Thursday, the Fund’s Director of Communications Julie Kozack confirmed that an IMF delegation was currently in Islamabad, engaging in talks with Pakistani authorities.
She was asked if the talks could lead to a staff-level agreement on a new loan or if it was just a preliminary visit. The journalists also speculated if it was still too early to have a staff-level agreement.
“On Pakistan, given that there is a mission on the ground, we will wait for them to complete their work and we will communicate the findings of the mission in due course, including, I think, some answers to your questions.”
Ms Kozack provided an update on the Islamabad talks, noting that on April 29, the IMF Executive Board completed the second review of the Stand-by Arrangement for Pakistan, which enabled a disbursement of about $1.1 billion.
“The completion by our Board of the second and final review of the Stand-by Arrangement reflected the authorities’ strong policy efforts during the time of the standby, which did help stabilise the economy,” she said.
SOURCE: DAWN
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‘IMF sets strict conditions for new bailout programme’
The sources privy to the development said that the IMF asked the federal government not to borrow from the State Bank of Pakistan and to only sell sukuk bonds in the stock market.
The IMF has also asked the Pakistani government to set the dollar exchange rate according to market conditions and fixation of the interest rate as per inflation.
The sources said that the IMF also sought the implementation of a strict monetary policy for reduction of the budget deficit.
The maintained that debts and interest payments on Pakistan are the main reason for the deficit, asking the finance ministry to reduce pensions and other expenses.
The sources said around Rs 9,787 billion will be set aside for loan interest in the next fiscal year’s budget while the current fiscal year’s loan interest payments are expected to be Rs 8,371 billion.
In the first nine months of the current financial year, Rs 5,518 billion has been paid in interest on internal and external loans.
It is pertinent to mention here that Pakistan is seeking new bailout programme with the IMF. The monetary fund also confirmed that talks are underway with Pakistan on 24th ‘longer and larger’ bailout programme under the Extended Fund Facility.
When asked about the staff-level agreement, IMF Communication Director Julie Kozack – while addressing a press briefing – avoided answering, indicating that the negotiations are still ongoing.
“Right now, a mission team led by Nathan Porter is meeting with Pakistan authorities this week to discuss the next phase of our engagement.”
She said: “On April 29th of this year, our Executive Board completed the second review of the stand-by arrangement for Pakistan, allowing a disbursement of about $1.1 billion.
arynews.tv
The sources privy to the development said that the IMF asked the federal government not to borrow from the State Bank of Pakistan and to only sell sukuk bonds in the stock market.
The IMF has also asked the Pakistani government to set the dollar exchange rate according to market conditions and fixation of the interest rate as per inflation.
The sources said that the IMF also sought the implementation of a strict monetary policy for reduction of the budget deficit.
The maintained that debts and interest payments on Pakistan are the main reason for the deficit, asking the finance ministry to reduce pensions and other expenses.
The sources said around Rs 9,787 billion will be set aside for loan interest in the next fiscal year’s budget while the current fiscal year’s loan interest payments are expected to be Rs 8,371 billion.
In the first nine months of the current financial year, Rs 5,518 billion has been paid in interest on internal and external loans.
It is pertinent to mention here that Pakistan is seeking new bailout programme with the IMF. The monetary fund also confirmed that talks are underway with Pakistan on 24th ‘longer and larger’ bailout programme under the Extended Fund Facility.
When asked about the staff-level agreement, IMF Communication Director Julie Kozack – while addressing a press briefing – avoided answering, indicating that the negotiations are still ongoing.
“Right now, a mission team led by Nathan Porter is meeting with Pakistan authorities this week to discuss the next phase of our engagement.”
She said: “On April 29th of this year, our Executive Board completed the second review of the stand-by arrangement for Pakistan, allowing a disbursement of about $1.1 billion.
'IMF sets strict conditions for new bailout programme'
ISLAMABAD: The International Monetary Fund (IMF) has set strict conditions for Pakistan to get the new bailout programme, ARY News reported quoting
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Policy-level talks to begin from tomorrow for new IMF loan
Following the technical-level talks, Pakistan and IMF will begin the policy-level talks from Monday (tomorrow).
In this regard, the IMF conditions will be finalized in view of technical-level negotiations for the new loan, the Ministry of Finance said, adding that Memorandum of Economic and Policy Framework will also be finalized.
In addition, the size and tenure of the new loan will be finalized after a detailed discussion during the policy-level talks, said the ministry.
The sources said the conditions and future targets will be finalized during the policy-level talks.
As per the ministry sources, the policy-level talks will finalize the tax-based revenue targets for FBR, non-tax revenue targets, fiscal deficit, privatisation and budget targets for the financial year 2024-25.
Sources said the IMF review mission is likely to meet Prime Minister Shehbaz Shraif while the staff-level agreement is also expected for the new IMF loan after the policy-level talks.
SOURCE: EXPRESS TRIBUNE
Following the technical-level talks, Pakistan and IMF will begin the policy-level talks from Monday (tomorrow).
In this regard, the IMF conditions will be finalized in view of technical-level negotiations for the new loan, the Ministry of Finance said, adding that Memorandum of Economic and Policy Framework will also be finalized.
In addition, the size and tenure of the new loan will be finalized after a detailed discussion during the policy-level talks, said the ministry.
The sources said the conditions and future targets will be finalized during the policy-level talks.
As per the ministry sources, the policy-level talks will finalize the tax-based revenue targets for FBR, non-tax revenue targets, fiscal deficit, privatisation and budget targets for the financial year 2024-25.
Sources said the IMF review mission is likely to meet Prime Minister Shehbaz Shraif while the staff-level agreement is also expected for the new IMF loan after the policy-level talks.
SOURCE: EXPRESS TRIBUNE
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IMF asks Pakistan to ‘impose’ tax on monthly pensions
In another ‘demand’, the International Monetary Fund (IMF) mission asked Pakistani authorities to impose tax on monthly pensions exceeding Rs 100,000, ARY News reported on Sunday, citing sources.
Sources close to the development revealed that the ‘new bailout programme’ will necessitate pension reforms, with policy talks scheduled to commence tomorrow as negotiations between Pakistan and IMF have reached their final phase.
One of the key components of the new loan program is the imposition of a tax on monthly pensions above Rs 100,000 as ‘insisted’ by the IMF.
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In another ‘demand’, the International Monetary Fund (IMF) mission asked Pakistani authorities to impose tax on monthly pensions exceeding Rs 100,000, ARY News reported on Sunday, citing sources.
Sources close to the development revealed that the ‘new bailout programme’ will necessitate pension reforms, with policy talks scheduled to commence tomorrow as negotiations between Pakistan and IMF have reached their final phase.
One of the key components of the new loan program is the imposition of a tax on monthly pensions above Rs 100,000 as ‘insisted’ by the IMF.
IMF asks Pakistan to 'impose' tax on monthly pensions
ISLAMABAD: In another ‘demand’, the International Monetary Fund (IMF) mission asked Pakistani authorities to impose tax on monthly pensions exceeding Rs
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Pakistan, IMF to start policy level talks for new bailout package today: sources
Pakistan and the visiting staff mission of the International Monetary Fund (IMF) would start policy-level talks for a new bailout package on Monday, sources said.
The negotiations would focus on the size and terms of the new loan programme and are expected to finalize the objectives and conditions for the upcoming fiscal year.
Future fiscal targets for tax and non-tax revenue would also be set and macroeconomic goals for the next fiscal year would also be determined
Sources said that negotiations aimed at finalising an agreement on the new loan programme by the end of this week
An IMF staff-level agreement is anticipated upon the conclusion of the policy-level talks.
The IMF mission is conducting a thorough review of Pakistan’s economic targets and performance. The mission is also expected to meet with Prime Minister Shehbaz Sharif this week.
The outcome of the policy-level negotiations would pave the way for a new IMF programme to support Pakistan’s economic recovery efforts.
The South Asian country has not shared the amount of loan it seeks from the Fund, but in February Bloomberg News reported the amount to be at least $6 billion. The country would seek to negotiate an Extended Fund Facility with the IMF, the report added.
Pakistan last month completed a short-term $3 billion programme, which helped stave off sovereign default, but the government of Prime Minister Shehbaz Sharif has stressed the need for a fresh, longer-term programme.
In its staff report earlier this week, the IMF acknowledged Pakistan’s economic improvement, however, it warned that the outlook remains challenging, with downside risks remaining exceptionally high.
The country narrowly averted default last summer, and its $350 billion economy has stabilised after the completion of the last IMF programme, with inflation coming down to around 17% in April from a record high of 38% last May.
Pakistan, IMF to start policy level talks for new bailout package today: sources
Talks are expected to be around amount of the package
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Pakistan, IMF agree to increase budget for BISP
In the ongoing negotiations between Pakistan and the International Monetary Fund (IMF), a significant agreement has been reached to increase the budget for the Benazir Income Support Programme (BISP). The budget for the next financial year is set to rise from the current Rs470 billion to Rs530 billion.
Alongside this increase, there are also proposals to expand the number of beneficiaries and the stipends they receive.
The IMF has underscored the need for greater expansion of social protection programs to eradicate poverty. This includes using data from individuals registered in BISP to implement targeted subsidies more effectively. The government has assured the IMF that provinces will be encouraged to share the burden of social security.
There is a plan to protect BISP beneficiaries through a cash transfer program to mitigate electricity tariff impacts. This move is part of a broader strategy to provide targeted subsidies using data from BISP registrants. Additionally, the number of beneficiaries is proposed to be increased, with a goal to register 20 million households by September.
Currently, BISP benefits 9.3 million individuals, as per the briefing to the IMF mission, adding that this year, an additional 300,000 families have been included in the sponsorship program. The health cash transfer program now supports 900,000 families, while the education cash transfer program has enrolled 1.9 million children.
The IMF has demanded increased transparency and improved administrative efficiency within BISP. These measures are aimed at ensuring that the expanded budget and resources are effectively utilized to benefit the targeted populations.
Macroeconomic framework
On the other hand, Pakistan's economic team has engaged in discussions with the International Monetary Fund (IMF), sharing the macroeconomic framework as both parties work towards setting fundamental economic goals.
Differences persist between the IMF and Pakistan regarding the definition of fundamental economic goals. The IMF estimates GDP growth to be limited to 3.5% in the next fiscal year, while the Finance Ministry has proposed a slightly higher growth target of 3.7%.
Inflation estimates also vary, with the IMF projecting it at 12.7% and the Finance Ministry at 11.8%. Sectoral growth targets have been proposed, with a 3.5% target for the agriculture sector, 3.8% for services, and 4% for the industrial sector.
Furthermore, there is a possibility of spending more than Rs9,700 billion in interest on loans. The IMF estimates the current account deficit at $4.6 billion, with the Finance Ministry suggesting a slightly lower target of $4.2 billion.
There are proposals to generate over $61 billion from exports and remittances, with an export target of $32.7 billion. Import estimates vary, with the Finance Ministry estimating $58 billion and the IMF projecting $61 billion.
The government has set a remittance target of Rs30.6 billion for the next financial year. The financial deficit for the next fiscal year is estimated at Rs9,600 billion, with a proposal to allocate Rs1,000 billion for federal development projects. The Federal Board of Revenue (FBR) aims to achieve a tax target of Rs12,400 billion, including an additional tax collection of Rs1,300 billion compared to the current year. Additionally, the pension bill is expected to increase from Rs801 billion to Rs960 billion.
SAMAA
In the ongoing negotiations between Pakistan and the International Monetary Fund (IMF), a significant agreement has been reached to increase the budget for the Benazir Income Support Programme (BISP). The budget for the next financial year is set to rise from the current Rs470 billion to Rs530 billion.
Alongside this increase, there are also proposals to expand the number of beneficiaries and the stipends they receive.
The IMF has underscored the need for greater expansion of social protection programs to eradicate poverty. This includes using data from individuals registered in BISP to implement targeted subsidies more effectively. The government has assured the IMF that provinces will be encouraged to share the burden of social security.
There is a plan to protect BISP beneficiaries through a cash transfer program to mitigate electricity tariff impacts. This move is part of a broader strategy to provide targeted subsidies using data from BISP registrants. Additionally, the number of beneficiaries is proposed to be increased, with a goal to register 20 million households by September.
Currently, BISP benefits 9.3 million individuals, as per the briefing to the IMF mission, adding that this year, an additional 300,000 families have been included in the sponsorship program. The health cash transfer program now supports 900,000 families, while the education cash transfer program has enrolled 1.9 million children.
The IMF has demanded increased transparency and improved administrative efficiency within BISP. These measures are aimed at ensuring that the expanded budget and resources are effectively utilized to benefit the targeted populations.
Macroeconomic framework
On the other hand, Pakistan's economic team has engaged in discussions with the International Monetary Fund (IMF), sharing the macroeconomic framework as both parties work towards setting fundamental economic goals.
Differences persist between the IMF and Pakistan regarding the definition of fundamental economic goals. The IMF estimates GDP growth to be limited to 3.5% in the next fiscal year, while the Finance Ministry has proposed a slightly higher growth target of 3.7%.
Inflation estimates also vary, with the IMF projecting it at 12.7% and the Finance Ministry at 11.8%. Sectoral growth targets have been proposed, with a 3.5% target for the agriculture sector, 3.8% for services, and 4% for the industrial sector.
Furthermore, there is a possibility of spending more than Rs9,700 billion in interest on loans. The IMF estimates the current account deficit at $4.6 billion, with the Finance Ministry suggesting a slightly lower target of $4.2 billion.
There are proposals to generate over $61 billion from exports and remittances, with an export target of $32.7 billion. Import estimates vary, with the Finance Ministry estimating $58 billion and the IMF projecting $61 billion.
The government has set a remittance target of Rs30.6 billion for the next financial year. The financial deficit for the next fiscal year is estimated at Rs9,600 billion, with a proposal to allocate Rs1,000 billion for federal development projects. The Federal Board of Revenue (FBR) aims to achieve a tax target of Rs12,400 billion, including an additional tax collection of Rs1,300 billion compared to the current year. Additionally, the pension bill is expected to increase from Rs801 billion to Rs960 billion.
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Parliamentary nod for prior actions must by June 30 for IMF loan
Pakistan would have to complete a set of prior actions — mostly through binding parliamentary approvals and legislation — within the next 40 days in order to reach a formal staff level agreement (SLA) with the International Monetary Fund (IMF) for its next bailout programme, as a fortnight-long dialogue winds down.
Informed sources said Pakistani authorities and an IMF staff mission, led by Nathan Porter, had completed their engagements covering almost all critical sectors of economy, including major reforms in the power and gas sectors, state-owned entities, pensions, revenue mobilisation and expansion, and monetary policy horizon in line with inflationary expectations.
The two sides have reached a broad understanding on action points, their timelines and backup plans that the government would comply with through parliamentary sanction of budgetary measures and related legislation in the Finance Bill 2024-25.
“The fund wants a stamp of approval from parliament for the reform and policy actions, given the unpredictable political environment,” said an official, adding that the mission would be flying out on Friday without announcing an SLA.
The two sides already had their customary goodwill receptions.
On implementation of gas and electricity tariff adjustments and beginning of their reform actions besides approval of taxation and trade tariff related policy measures and amendments in tax laws through finance bill 2024-25, the fund mission would review them and on satisfactory compliance, formally announce SLA by end-June or early July 2024.
“Most probably online consultations would be enough for minor clarifications here and there after the budget is approved by the parliament and there would be no need for a follow up mission,” an official said in response to a question.
“Review has been completed, last leg of talks looks good so far, perhaps some performance benchmarks maybe adjusted by the fund, nothing else and that too after budget process is over.”
The federal budget presentation in the parliament is almost final for June 7, as Eidul Azha holidays would leave very tight schedule for parliamentary debate, the official said.
Tax-related measures
Officials said the tax-related measures like a reduction in the number of slabs for salaried persons, treatment of agricultural income as normal income like any other sector, actions and punishments for non-filers and increase in their transaction costs would be given legal coverage in the finance bill through amendments in income and sales tax laws.
Likewise, it has been agreed to remove Rs60 per litre cap on petroleum development levy and keep it open-ended, besides inserting clauses enabling carbon tax would also be part of the finance bill. These two taxes are planned for revenue enhancement and leverage for price adjustments to create buffers, the sources said.
Informed sources said the two sides have agreed over upward revision of natural gas prices for domestic, fertiliser, CNG and cement sectors, no change for special commercials like tandoors and some downward adjustments in gas rate for power sector as part of upcoming gas price review starting with new fiscal year.
The two sides have discussed in detail the reforms for reduction in gas sector circular debt including through progress on weighted average cost of gas (WACOG) – the mix of local gas and imported LNG reform and also contingency steps in case of slippage on WACOG exercise.
Debt repayment
The power division also exchanged at least three different plans with the IMF, at times assisted by the World Bank, on how to address rising capacity payment and its declining horizon of debt repayments of CPEC-related projects. The principle objective of full cost recovery through tariff would be protected by the authorities along with demand triggering measures. All numbers and data not only pertaining to power sector but also other state-owned entities (SOE) have been agreed upon along with their budgetary impact.
“Three-pronged and different sets of back-up plans for recoveries, reforms and tariff rationalisation in both gas and electricity were shared and agreed upon that would remain progressive to the emerging ground realities,” an official said. On average, gas prices would go up by somewhere between 20pc and 30pc with the advent of new fiscal year, to begin with depending on progress on WACOG.
List of 24 SOEs shared
In this respect, a list of 24 SOEs has already been shared with the IMF with their categorisation as strategic, essential and transfer to private sector and Pakistan has conceded to the IMF demand that only those functions and services be kept in the government which could not be performed by the private sector. In this regard, a few fresh SOEs have also come to fore like a few subsidiaries of Pakistan Railways and Science and Technology and the authorities have committed to speed up the process. The two sides, however, did not see much progress in the privatisation programme during the next fiscal year, except a couple of ripe transactions like Pakistan International Airlines.
The two sides would remain engaged on the future of state organs like Pakistan Television and Radio Pakistan and whether these could go to an already saturated private sector. They would, nevertheless, have to comply with corporate rules including transparency in their financials.
SOURCE: DAWN NEWS
Pakistan would have to complete a set of prior actions — mostly through binding parliamentary approvals and legislation — within the next 40 days in order to reach a formal staff level agreement (SLA) with the International Monetary Fund (IMF) for its next bailout programme, as a fortnight-long dialogue winds down.
Informed sources said Pakistani authorities and an IMF staff mission, led by Nathan Porter, had completed their engagements covering almost all critical sectors of economy, including major reforms in the power and gas sectors, state-owned entities, pensions, revenue mobilisation and expansion, and monetary policy horizon in line with inflationary expectations.
The two sides have reached a broad understanding on action points, their timelines and backup plans that the government would comply with through parliamentary sanction of budgetary measures and related legislation in the Finance Bill 2024-25.
“The fund wants a stamp of approval from parliament for the reform and policy actions, given the unpredictable political environment,” said an official, adding that the mission would be flying out on Friday without announcing an SLA.
The two sides already had their customary goodwill receptions.
On implementation of gas and electricity tariff adjustments and beginning of their reform actions besides approval of taxation and trade tariff related policy measures and amendments in tax laws through finance bill 2024-25, the fund mission would review them and on satisfactory compliance, formally announce SLA by end-June or early July 2024.
“Most probably online consultations would be enough for minor clarifications here and there after the budget is approved by the parliament and there would be no need for a follow up mission,” an official said in response to a question.
“Review has been completed, last leg of talks looks good so far, perhaps some performance benchmarks maybe adjusted by the fund, nothing else and that too after budget process is over.”
The federal budget presentation in the parliament is almost final for June 7, as Eidul Azha holidays would leave very tight schedule for parliamentary debate, the official said.
Tax-related measures
Officials said the tax-related measures like a reduction in the number of slabs for salaried persons, treatment of agricultural income as normal income like any other sector, actions and punishments for non-filers and increase in their transaction costs would be given legal coverage in the finance bill through amendments in income and sales tax laws.
Likewise, it has been agreed to remove Rs60 per litre cap on petroleum development levy and keep it open-ended, besides inserting clauses enabling carbon tax would also be part of the finance bill. These two taxes are planned for revenue enhancement and leverage for price adjustments to create buffers, the sources said.
Informed sources said the two sides have agreed over upward revision of natural gas prices for domestic, fertiliser, CNG and cement sectors, no change for special commercials like tandoors and some downward adjustments in gas rate for power sector as part of upcoming gas price review starting with new fiscal year.
The two sides have discussed in detail the reforms for reduction in gas sector circular debt including through progress on weighted average cost of gas (WACOG) – the mix of local gas and imported LNG reform and also contingency steps in case of slippage on WACOG exercise.
Debt repayment
The power division also exchanged at least three different plans with the IMF, at times assisted by the World Bank, on how to address rising capacity payment and its declining horizon of debt repayments of CPEC-related projects. The principle objective of full cost recovery through tariff would be protected by the authorities along with demand triggering measures. All numbers and data not only pertaining to power sector but also other state-owned entities (SOE) have been agreed upon along with their budgetary impact.
“Three-pronged and different sets of back-up plans for recoveries, reforms and tariff rationalisation in both gas and electricity were shared and agreed upon that would remain progressive to the emerging ground realities,” an official said. On average, gas prices would go up by somewhere between 20pc and 30pc with the advent of new fiscal year, to begin with depending on progress on WACOG.
List of 24 SOEs shared
In this respect, a list of 24 SOEs has already been shared with the IMF with their categorisation as strategic, essential and transfer to private sector and Pakistan has conceded to the IMF demand that only those functions and services be kept in the government which could not be performed by the private sector. In this regard, a few fresh SOEs have also come to fore like a few subsidiaries of Pakistan Railways and Science and Technology and the authorities have committed to speed up the process. The two sides, however, did not see much progress in the privatisation programme during the next fiscal year, except a couple of ripe transactions like Pakistan International Airlines.
The two sides would remain engaged on the future of state organs like Pakistan Television and Radio Pakistan and whether these could go to an already saturated private sector. They would, nevertheless, have to comply with corporate rules including transparency in their financials.
SOURCE: DAWN NEWS
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IMF, Pakistan make significant progress on new loan, lender’s mission says
An International Monetary Fund (IMF) mission and Pakistan have made significant progress towards reaching a staff-level agreement for an extended fund facility (EFF), the global lender said on Friday.
Shortly after the statement’s release, the Pakistan Stock Exchange (PSX) gained 556.5 points, to stand at 75,670.97 points at 9:41am from the previous close of 75,114.47.
The IMF has opened discussions with Pakistan on a new loan programme after Islamabad last month completed a short-term $3 billion programme, which helped stave off a sovereign debt default.
An IMF team, led by mission chief Nathan Porter, concluded discussions with the authorities on Thursday after arriving in Pakistan on May 13, the lender said in a statement.
“The mission and the authorities will continue policy discussions virtually over the coming days aiming to finalise discussions, including the financial support needed to underpin the authorities’ reform efforts from the IMF and Pakistan’s bilateral and multilateral partners,” Porter said.
“The authorities’ reform program aims to move Pakistan from economic stabilisation to strong, inclusive, and resilient growth,” the statement added.
It noted that the Pakistani authorities “plan to continue to strengthen public finances to reduce vulnerabilities by improving domestic revenue mobilisation through fairer taxation while scaling up spending for human capital, social protection, and climate resilience”.
They also plan to “secure energy sector viability, including reforms to reduce the high cost of energy; continue progress towards low and stable inflation by appropriate monetary and exchange rate policies; improve public service provision through state-owned enterprise (SOE) restructuring and privatisation; and promote private sector development, by securing a level-playing field for investment and stronger governance”, Porter added.
Terming the discussions as “fruitful”, Porter said the global lender and the Pakistani authorities will “continue policy discussions virtually over the coming days aiming to finalise discussions, including the financial support needed to underpin the authorities’ reform efforts from the IMF and Pakistan’s bilateral and multilateral partners”.
Pakistan is likely to seek at least $6 billion under the new programme and request additional financing from the IMF under the Resilience and Sustainability Trust.
The global lender has emphasised that prioritising reforms to revitalise the Pakistani economy outweighs the size of the new loan package being negotiated.
Ahead of the discussions, the IMF had earlier this month warned that downside risks for the Pakistani economy remained exceptionally high.
SOURCE: DAWN NEWS
An International Monetary Fund (IMF) mission and Pakistan have made significant progress towards reaching a staff-level agreement for an extended fund facility (EFF), the global lender said on Friday.
Shortly after the statement’s release, the Pakistan Stock Exchange (PSX) gained 556.5 points, to stand at 75,670.97 points at 9:41am from the previous close of 75,114.47.
The IMF has opened discussions with Pakistan on a new loan programme after Islamabad last month completed a short-term $3 billion programme, which helped stave off a sovereign debt default.
An IMF team, led by mission chief Nathan Porter, concluded discussions with the authorities on Thursday after arriving in Pakistan on May 13, the lender said in a statement.
“The mission and the authorities will continue policy discussions virtually over the coming days aiming to finalise discussions, including the financial support needed to underpin the authorities’ reform efforts from the IMF and Pakistan’s bilateral and multilateral partners,” Porter said.
“The authorities’ reform program aims to move Pakistan from economic stabilisation to strong, inclusive, and resilient growth,” the statement added.
It noted that the Pakistani authorities “plan to continue to strengthen public finances to reduce vulnerabilities by improving domestic revenue mobilisation through fairer taxation while scaling up spending for human capital, social protection, and climate resilience”.
They also plan to “secure energy sector viability, including reforms to reduce the high cost of energy; continue progress towards low and stable inflation by appropriate monetary and exchange rate policies; improve public service provision through state-owned enterprise (SOE) restructuring and privatisation; and promote private sector development, by securing a level-playing field for investment and stronger governance”, Porter added.
Terming the discussions as “fruitful”, Porter said the global lender and the Pakistani authorities will “continue policy discussions virtually over the coming days aiming to finalise discussions, including the financial support needed to underpin the authorities’ reform efforts from the IMF and Pakistan’s bilateral and multilateral partners”.
Pakistan is likely to seek at least $6 billion under the new programme and request additional financing from the IMF under the Resilience and Sustainability Trust.
The global lender has emphasised that prioritising reforms to revitalise the Pakistani economy outweighs the size of the new loan package being negotiated.
Ahead of the discussions, the IMF had earlier this month warned that downside risks for the Pakistani economy remained exceptionally high.
SOURCE: DAWN NEWS
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IMF ‘asks’ Pakistan to deregulate prices of red meat, milk
Sources said the IMF asked the Pakistan government to take back the powers of regulating milk and red meat prices from the deputy commissioners and it should be decided by the market.
Following the ‘demand’ of the IMF, the federal government has begun considering deregulation of milk, beef and mutton prices by stopping monitoring them, leaving consumers at the mercy of the market players’ demand and supply mechanism.
Officials from federal and provincial governments and stakeholders reportedly agreed that “deregulating red meat and milk prices is necessary to support the development of the livestock sector.”
The need to adopt a regulatory mechanism covering the quality aspects of milk, meat, and mutton was also stressed. The sources said the summary regarding deregulating the prices of milk and meat will be forwarded to the Economic Coordination Committee (ECC) for the approval.
Pakistan Dairy Cattle and Farmers Association has welcomed the decision of deregulating the prices.
Meanwhile, experts have cautioned that inflation will touch record high after deregulation and de-caping of prices.
arynews.tv
Sources said the IMF asked the Pakistan government to take back the powers of regulating milk and red meat prices from the deputy commissioners and it should be decided by the market.
Following the ‘demand’ of the IMF, the federal government has begun considering deregulation of milk, beef and mutton prices by stopping monitoring them, leaving consumers at the mercy of the market players’ demand and supply mechanism.
Officials from federal and provincial governments and stakeholders reportedly agreed that “deregulating red meat and milk prices is necessary to support the development of the livestock sector.”
The need to adopt a regulatory mechanism covering the quality aspects of milk, meat, and mutton was also stressed. The sources said the summary regarding deregulating the prices of milk and meat will be forwarded to the Economic Coordination Committee (ECC) for the approval.
Pakistan Dairy Cattle and Farmers Association has welcomed the decision of deregulating the prices.
Meanwhile, experts have cautioned that inflation will touch record high after deregulation and de-caping of prices.
IMF 'asks' Pakistan to deregulate prices of red meat, milk
The International Monetary Fund (IMF) has 'asked' Pakistan to deregulate red meat and milk prices, ARY News reported on Sunday, citing sources. Sources
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Good but why doesn't the IMF establish a regulatory commission to monitor corruption by our politicians?
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IMF releases official statement after loan talks with Pakistan
The International Monetary Fund (IMF) has released an official statement following discussions with Pakistan. The statement confirms that Islamabad has formally requested a new loan program from the IMF.
The IMF delegation, led by Mission Chief Nathan Porter, visited Pakistan and held extensive negotiations from May 13 to May 23 to discuss the country’s economic improvements.
The statement highlights that the Pakistani government is making serious efforts to increase revenue and emphasizes the need for fair tax collection from privileged sectors.
The International Monetary Fund (IMF) mission assured Pakistan of its commitment to working together for sustainable economic growth. The statement noted that Pakistan’s economy would stabilize with the support of the Extended Fund Facility (EFF) program.
Pakistan has successfully met the targets set under the Standby Arrangement Agreement, which will support the forthcoming new loan program.
The statement underscores the necessity of expanding the tax net to ensure economic growth and stability. The IMF calls for appropriate policy and exchange rate measures to control inflation and stresses the critical need for energy sector reforms in Pakistan.
Reducing the cost of energy production is essential, and a stringent monetary policy is required until inflation is under control, the statement said.
The IMF also highlighted the need to improve the performance of state-owned enterprises and indicated that privatization of these corporations is essential for better efficiency.
arynews.tv
The International Monetary Fund (IMF) has released an official statement following discussions with Pakistan. The statement confirms that Islamabad has formally requested a new loan program from the IMF.
The IMF delegation, led by Mission Chief Nathan Porter, visited Pakistan and held extensive negotiations from May 13 to May 23 to discuss the country’s economic improvements.
The statement highlights that the Pakistani government is making serious efforts to increase revenue and emphasizes the need for fair tax collection from privileged sectors.
The International Monetary Fund (IMF) mission assured Pakistan of its commitment to working together for sustainable economic growth. The statement noted that Pakistan’s economy would stabilize with the support of the Extended Fund Facility (EFF) program.
Pakistan has successfully met the targets set under the Standby Arrangement Agreement, which will support the forthcoming new loan program.
The statement underscores the necessity of expanding the tax net to ensure economic growth and stability. The IMF calls for appropriate policy and exchange rate measures to control inflation and stresses the critical need for energy sector reforms in Pakistan.
Reducing the cost of energy production is essential, and a stringent monetary policy is required until inflation is under control, the statement said.
The IMF also highlighted the need to improve the performance of state-owned enterprises and indicated that privatization of these corporations is essential for better efficiency.
IMF releases official statement after loan talks with Pakistan
The International Monetary Fund (IMF) has released an official statement following discussions with Pakistan. The statement confirms that Islamabad has
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IMF proposes spike in GST and taxes on salaried class in new budget: sources
The International Monetary Fund (IMF) has shared a draft proposal with Pakistani authorities outlining key conditions for a new loan program. These proposals are expected to significantly impact the upcoming federal budget for the next fiscal year.
The Pakistani economic team has begun finalizing the budget in light of the IMF’s conditions. The IMF has proposed a tax revenue target of 1290 billion Pakistani rupees for the next fiscal year, while the Federal Board of Revenue (FBR) is pushing for a target of 1250 billion rupees.
Sources reveal that ongoing online discussions and virtual meetings between the Pakistani economic team and the IMF are progressing. The IMF has proposed increasing the standard rate of the General Sales Tax (GST) from 18% to 19%. This change, if implemented, could generate an additional 180 billion rupees in revenue for the FBR over the next year.
The IMF has also proposed increasing the tax rate for high-income earners and raising the maximum rate from 30% to 40%. Additionally, the IMF suggests reducing the number of tax slabs for government employees from seven to four.
The IMF has proposed eliminating the fifth schedule from the Sales Tax Act, which relates to zero-rating, and bringing all items except exports under the standard GST rate. The IMF also suggests removing unnecessary tax exemptions in the sixth schedule and limiting tax concessions under the eighth schedule to only essential food items and health and education-related goods. The proposed tax rate for these items would be around 10%.
Sources within the Ministry of Finance state that the budget process is entering its final stages. As Pakistan is negotiating a new program with the IMF, the government is expected to implement the agreed-upon conditions in the upcoming budget.
This will pave the way for signing a staff-level agreement after budget approval, allowing Pakistan to secure a new three-year loan program from the IMF.
AAJ News
The International Monetary Fund (IMF) has shared a draft proposal with Pakistani authorities outlining key conditions for a new loan program. These proposals are expected to significantly impact the upcoming federal budget for the next fiscal year.
The Pakistani economic team has begun finalizing the budget in light of the IMF’s conditions. The IMF has proposed a tax revenue target of 1290 billion Pakistani rupees for the next fiscal year, while the Federal Board of Revenue (FBR) is pushing for a target of 1250 billion rupees.
Sources reveal that ongoing online discussions and virtual meetings between the Pakistani economic team and the IMF are progressing. The IMF has proposed increasing the standard rate of the General Sales Tax (GST) from 18% to 19%. This change, if implemented, could generate an additional 180 billion rupees in revenue for the FBR over the next year.
The IMF has also proposed increasing the tax rate for high-income earners and raising the maximum rate from 30% to 40%. Additionally, the IMF suggests reducing the number of tax slabs for government employees from seven to four.
The IMF has proposed eliminating the fifth schedule from the Sales Tax Act, which relates to zero-rating, and bringing all items except exports under the standard GST rate. The IMF also suggests removing unnecessary tax exemptions in the sixth schedule and limiting tax concessions under the eighth schedule to only essential food items and health and education-related goods. The proposed tax rate for these items would be around 10%.
Sources within the Ministry of Finance state that the budget process is entering its final stages. As Pakistan is negotiating a new program with the IMF, the government is expected to implement the agreed-upon conditions in the upcoming budget.
This will pave the way for signing a staff-level agreement after budget approval, allowing Pakistan to secure a new three-year loan program from the IMF.
AAJ News
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IMF demands Pakistan to ‘public’ parliamentarians, ministers’ assets
According to sources, the IMF has proposed strict anti-corruption measures in the upcoming budget 2024.
The monetary fund directed the government to establish a portal to disclose the assets of public officials, but the government has failed to do so, sources said.
Pakistan’s authorities are bound to create a portal and disclose asset details under the agreement with the IMF, sources added.
The government had prepared a Performa for officials to disclose their assets, but it was not made public, sources revealed.
Furthermore, banks will now be required to obtain asset information from government officials when opening new accounts, sources said.
Earlier, reports revealed that in order to meet the International Monetary Fund (IMF) target, the development budget of Pakistan is reportedly being affected.
The development budget of Rs 950 billion only Rs 379 billion have been utilized to meet IMF targets this year.
These budget reductions have damaging the various sectors including health, higher education and infrastructure projects in Pakistan.
Prior to this, IMF released an official statement following discussions with Pakistan. The statement confirmed that Islamabad has formally requested a new loan program from the IMF.
The IMF delegation, led by Mission Chief Nathan Porter, visited Pakistan and held extensive negotiations from May 13 to May 23 to discuss the country’s economic improvements.
The statement highlights that the Pakistani government is making serious efforts to increase revenue and emphasizes the need for fair tax collection from privileged sectors.
The International Monetary Fund (IMF) mission assured Pakistan of its commitment to working together for sustainable economic growth. The statement noted that Pakistan’s economy would stabilize with the support of the Extended Fund Facility (EFF) program.
Pakistan has successfully met the targets set under the Standby Arrangement Agreement, which will support the forthcoming new loan program.
The statement underscores the necessity of expanding the tax net to ensure economic growth and stability. The IMF calls for appropriate policy and exchange rate measures to control inflation and stresses the critical need for energy sector reforms in Pakistan.
Reducing the cost of energy production is essential, and a stringent monetary policy is required until inflation is under control, the statement said.
The IMF also highlighted the need to improve the performance of state-owned enterprises and indicated that privatization of these corporations is essential for better efficiency.
arynews.tv
According to sources, the IMF has proposed strict anti-corruption measures in the upcoming budget 2024.
The monetary fund directed the government to establish a portal to disclose the assets of public officials, but the government has failed to do so, sources said.
Pakistan’s authorities are bound to create a portal and disclose asset details under the agreement with the IMF, sources added.
The government had prepared a Performa for officials to disclose their assets, but it was not made public, sources revealed.
Furthermore, banks will now be required to obtain asset information from government officials when opening new accounts, sources said.
Earlier, reports revealed that in order to meet the International Monetary Fund (IMF) target, the development budget of Pakistan is reportedly being affected.
The development budget of Rs 950 billion only Rs 379 billion have been utilized to meet IMF targets this year.
These budget reductions have damaging the various sectors including health, higher education and infrastructure projects in Pakistan.
Prior to this, IMF released an official statement following discussions with Pakistan. The statement confirmed that Islamabad has formally requested a new loan program from the IMF.
The IMF delegation, led by Mission Chief Nathan Porter, visited Pakistan and held extensive negotiations from May 13 to May 23 to discuss the country’s economic improvements.
The statement highlights that the Pakistani government is making serious efforts to increase revenue and emphasizes the need for fair tax collection from privileged sectors.
The International Monetary Fund (IMF) mission assured Pakistan of its commitment to working together for sustainable economic growth. The statement noted that Pakistan’s economy would stabilize with the support of the Extended Fund Facility (EFF) program.
Pakistan has successfully met the targets set under the Standby Arrangement Agreement, which will support the forthcoming new loan program.
The statement underscores the necessity of expanding the tax net to ensure economic growth and stability. The IMF calls for appropriate policy and exchange rate measures to control inflation and stresses the critical need for energy sector reforms in Pakistan.
Reducing the cost of energy production is essential, and a stringent monetary policy is required until inflation is under control, the statement said.
The IMF also highlighted the need to improve the performance of state-owned enterprises and indicated that privatization of these corporations is essential for better efficiency.
IMF demands Pakistan to 'public' parliamentarians, ministers' assets
ISLAMABAD: The International Monetary Fund (IMF) on Saturday demanded Pakistan to public office holders, government officials, ministers, and
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Talks with IMF end without agreement
Another round of discussions between Pakistan and the International Monetary Fund (IMF) has ended inconclusively due to disagreement over new income tax rates for salaried and non-salaried persons and the imposition of standard 18% sales tax on agriculture and health sectors’ goods.
Discussions are revolving around whether to charge a new backbreaking 45% income tax from salaried and non-salaried individuals on a monthly income of just over Rs467,000, according to sources. At present, the maximum rate of 35% is applicable to a monthly income of over Rs500,000. However, both sides have converged on the issue of increasing the income tax burden on exporters in the next budget who paid a paltry sum of Rs86 billion this year, which is 280% less than the taxes paid by the salaried people. Pakistan also showed willingness to tax pensions beyond a certain income threshold.
Pakistan and the IMF authorities on Friday held discussions on the outstanding issues related to taxation and the energy sector. Sources said that both sides could not resolve their differences on the income tax threshold, the merger of salaried and non-salaried rates and the maximum income tax for individuals.
The IMF insisted on merging the slabs related to salaried, non-salaried and other incomes. On the government’s proposal of increasing the annual threshold of taxable income to Rs900,000, the IMF is asking for the maximum income tax rate to be increased from 35% to 45%. However, the government is not willing to increase the maximum rate for the salaried individuals to 45% but showed flexibility to keep the taxable income threshold at the current Rs600,000.
It is also asking to keep the salaried and non-salaried slabs separate but is willing to increase the highest tax rate for non-salaried persons to 45%, said the sources.
The non-salaried business individuals pay tax after excluding expenses while the salaried persons pay tax on their gross income without excluding the expenses.
Prime Minister Shehbaz Sharif is so far not willing to increase the burden on the salaried class.
According to a proposal, if the taxable income threshold is increased to Rs900,000 per annum, the income tax rate can be up to 7.5% on a monthly income of Rs100,000. The current rate is 2.5% for this category. For the next slab, if the monthly income is up to Rs133,000, the under-discussion tax rate is 20%. The current rate is 12.5% that too for up to monthly income of Rs200,000. The IMF wants a higher rate at the lower income level. This slab will directly hit Pakistan’s middle-income group.
According to the third under-discussion slab, if the monthly income is Rs267,000, the tax rate could be 30%. The current rate on the monthly income of Rs300,000 is 22.5%. According to the fourth under-discussion slab, if the monthly income is up to Rs466,000, the income tax rate might be 40%. At present, on the monthly income of up to Rs500,000, the tax rate is 27.5%.
For the highest income tax rate of 45%, the under-discussion monthly income level is above Rs467,000, according to sources. At present, on over Rs500,000 income, a 35% tax rate is charged. The salaried class has so far paid Rs325 billion in income tax in 11 months, which is expected to rise to around Rs360 billion at the end of the current fiscal year.
If the revised income tax rates are accepted, the tax contribution of the salaried class will jump to Rs540 billion in the next fiscal year, said the sources. To absorb this increase in tax rates, even a 30% pay hike will not be sufficient.
Sources said that the IMF had asked Pakistan to share alternative proposals, in case it was not willing to increase the tax burden of the salaried class. Another round of discussions is expected soon.
Exporters’ tax rates
Sources said that an understanding had been reached between Pakistan and the IMF on changing the tax regime for the richest exporters.
As against the existing 1% final income tax on exporters, it has been proposed that from the next fiscal year, the 1% rate should be treated as minimum, according to government sources. As a result, the exporters will have to submit documents to justify their income and expenditures that are expected to boost collections from them.
Pakistan’s taxation system promotes inequality and puts a higher burden on people that have little capacity to bear. The IMF has asked Pakistan to end all special tax regimes, like the low income tax on gains made by investing in the stock market and bank deposits.
The global lender has recommended treating these gains as part of normal income. The IMF is pushing Pakistan to increase the burden on the salaried class until the country recovers higher taxes from the non-salaried business individuals.
During the first 11 months of the current fiscal year, the exporters paid a paltry sum of Rs85.5 billion in taxes, which was Rs241 billion, or 280%, less than the amount paid by the salaried class. During July-May FY24, the salaried class paid Rs326 billion in taxes, higher by 40%, or Rs93 billion, compared to the same period of last year.
The record Rs326 billion in tax payments by the salaried class is also 223% more than the combined tax paid by the rich exporters and influential retailers.
GST disagreement
Sources said that there was also no consensus on slapping the standard 18% sales tax on fertiliser, pesticides and seeds – the crucial inputs for the agriculture sector. The government was also not willing, so far, to impose 18% sales tax on medicines, solar panels and medical and surgical equipment. In case the 18% tax is imposed on medicines, there will be an additional collection of Rs130 billion in the next fiscal year. Similarly, taxing the medical and health-related supplies will generate another Rs100 billion.
EXPRESS TRIBUNE
Another round of discussions between Pakistan and the International Monetary Fund (IMF) has ended inconclusively due to disagreement over new income tax rates for salaried and non-salaried persons and the imposition of standard 18% sales tax on agriculture and health sectors’ goods.
Discussions are revolving around whether to charge a new backbreaking 45% income tax from salaried and non-salaried individuals on a monthly income of just over Rs467,000, according to sources. At present, the maximum rate of 35% is applicable to a monthly income of over Rs500,000. However, both sides have converged on the issue of increasing the income tax burden on exporters in the next budget who paid a paltry sum of Rs86 billion this year, which is 280% less than the taxes paid by the salaried people. Pakistan also showed willingness to tax pensions beyond a certain income threshold.
Pakistan and the IMF authorities on Friday held discussions on the outstanding issues related to taxation and the energy sector. Sources said that both sides could not resolve their differences on the income tax threshold, the merger of salaried and non-salaried rates and the maximum income tax for individuals.
The IMF insisted on merging the slabs related to salaried, non-salaried and other incomes. On the government’s proposal of increasing the annual threshold of taxable income to Rs900,000, the IMF is asking for the maximum income tax rate to be increased from 35% to 45%. However, the government is not willing to increase the maximum rate for the salaried individuals to 45% but showed flexibility to keep the taxable income threshold at the current Rs600,000.
It is also asking to keep the salaried and non-salaried slabs separate but is willing to increase the highest tax rate for non-salaried persons to 45%, said the sources.
The non-salaried business individuals pay tax after excluding expenses while the salaried persons pay tax on their gross income without excluding the expenses.
Prime Minister Shehbaz Sharif is so far not willing to increase the burden on the salaried class.
According to a proposal, if the taxable income threshold is increased to Rs900,000 per annum, the income tax rate can be up to 7.5% on a monthly income of Rs100,000. The current rate is 2.5% for this category. For the next slab, if the monthly income is up to Rs133,000, the under-discussion tax rate is 20%. The current rate is 12.5% that too for up to monthly income of Rs200,000. The IMF wants a higher rate at the lower income level. This slab will directly hit Pakistan’s middle-income group.
According to the third under-discussion slab, if the monthly income is Rs267,000, the tax rate could be 30%. The current rate on the monthly income of Rs300,000 is 22.5%. According to the fourth under-discussion slab, if the monthly income is up to Rs466,000, the income tax rate might be 40%. At present, on the monthly income of up to Rs500,000, the tax rate is 27.5%.
For the highest income tax rate of 45%, the under-discussion monthly income level is above Rs467,000, according to sources. At present, on over Rs500,000 income, a 35% tax rate is charged. The salaried class has so far paid Rs325 billion in income tax in 11 months, which is expected to rise to around Rs360 billion at the end of the current fiscal year.
If the revised income tax rates are accepted, the tax contribution of the salaried class will jump to Rs540 billion in the next fiscal year, said the sources. To absorb this increase in tax rates, even a 30% pay hike will not be sufficient.
Sources said that the IMF had asked Pakistan to share alternative proposals, in case it was not willing to increase the tax burden of the salaried class. Another round of discussions is expected soon.
Exporters’ tax rates
Sources said that an understanding had been reached between Pakistan and the IMF on changing the tax regime for the richest exporters.
As against the existing 1% final income tax on exporters, it has been proposed that from the next fiscal year, the 1% rate should be treated as minimum, according to government sources. As a result, the exporters will have to submit documents to justify their income and expenditures that are expected to boost collections from them.
Pakistan’s taxation system promotes inequality and puts a higher burden on people that have little capacity to bear. The IMF has asked Pakistan to end all special tax regimes, like the low income tax on gains made by investing in the stock market and bank deposits.
The global lender has recommended treating these gains as part of normal income. The IMF is pushing Pakistan to increase the burden on the salaried class until the country recovers higher taxes from the non-salaried business individuals.
During the first 11 months of the current fiscal year, the exporters paid a paltry sum of Rs85.5 billion in taxes, which was Rs241 billion, or 280%, less than the amount paid by the salaried class. During July-May FY24, the salaried class paid Rs326 billion in taxes, higher by 40%, or Rs93 billion, compared to the same period of last year.
The record Rs326 billion in tax payments by the salaried class is also 223% more than the combined tax paid by the rich exporters and influential retailers.
GST disagreement
Sources said that there was also no consensus on slapping the standard 18% sales tax on fertiliser, pesticides and seeds – the crucial inputs for the agriculture sector. The government was also not willing, so far, to impose 18% sales tax on medicines, solar panels and medical and surgical equipment. In case the 18% tax is imposed on medicines, there will be an additional collection of Rs130 billion in the next fiscal year. Similarly, taxing the medical and health-related supplies will generate another Rs100 billion.
EXPRESS TRIBUNE
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IMF conditions relaxed with help from friendly nations: PM's adviser
Adviser to Prime Minister on Political Affairs Rana Sanaullah said Monday that the International Monetary Fund (IMF) relaxed conditions after friendly nations helped Pakistan with their pledges."This time, the credit [...] for getting the conditions relaxed goes to our friendly countries as stated by Prime Minister Shehbaz Sharif," Sanaullah said during a press conference in Faisalabad.
Gulf nations Saudi Arabia and the United Arab Emirates (UAE) have signed multi-billion dollar memorandums of understanding with Pakistan recently, with PM Shehbaz stressing that the country would not seek loans, but rather investments to boost the economy.
"The nations that helped include China, Saudi Arabia, and UAE. Their promises and I would like to call it 'hand holding' would ensure that [the previous] scenario does not repeat," Sanaullah said.
The PDM-led coalition government, which came into power in April 2022 and served till August 2023, had to take a slew of measures, including raising petrol prices to historic highs, and increasing power and gas tariffs, to secure a bailout, which skyrocketed inflation.
Sanaullah noted that during the 16 months when the PDM was in power, the IMF's conditions were stricter, but he hoped that it would not be the case this time around.
With Shehbaz again at the helm and Pakistan desperately needing another IMF bailout, the government is now taking steps to secure a longer programme from the lender.
Experts have said that the government's plan to raise taxes in its 2024-25 budget and boost state revenues will help it win approval from the IMF for a loan to stave off another economic meltdown, but could fuel public anger.
The PML-N-led government has set a challenging tax revenue target of Rs13 trillion for the year starting July 1, a near-40% jump from the current year, and a sharp drop in its fiscal deficit to 5.9% of GDP from 7.4% for the current year.
The federal government had to reduce the fiscal deficit as part of negotiations with the IMF, with which it is discussing a loan of $6-8 billion, as it seeks to avert a debt default for an economy growing at the slowest pace in the region.
"The budget is enough to get an IMF programme, as long as ... the budget is passed in the way it is presented," Miftah Ismail, who as then-finance minister successfully negotiated the revival of the last Extended Fund Facility (EFF) programme in 2022, told Reuters.
IMF conditions relaxed with help from friendly nations: PM's adviser
Sanaullah says IMF conditions were much stricter.PM's adviser says he hopes same won't happen now.Govt has proposed budget in line with IMF demands.Adviser to Prime Minister on Political Affairs Rana Sanaullah said Monday that the...
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Pakistan’s development budget slashed by Rs 250bn amid IMF pressures
Federal Planning Minister Ahsan Iqbal has announced a significant cut of Rs 250 billion in Pakistan’s development budget even before its approval by parliament.Speaking about the decision, Minister Ahsan Iqbal cited stringent conditions imposed by the International Monetary Fund (IMF) for the new economic program as the reason behind this reduction.
Addressing the media, Ahsan Iqbal expressed the challenges faced by the government, including poverty, lack of education, and mismanagement of resources.
He highlighted that the original Public Sector Development Program (PSDP) budget of Rs 1400 billion has now been slashed to Rs 1150 billion due to these economic constraints.
The minister emphasized that the current economic situation leaves no room for alternative choices and requires resource mobilization to address pressing financial issues.
He clarified that the decision to cut the development budget aims to alleviate the burden on the people and agricultural sectors, preventing the necessity for additional taxes.
Ahsan Iqbal mentioned the possibility of revising and potentially increasing the development budget in the upcoming financial year to better meet national economic needs.
Source: SAMAA
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Pakistan ‘hopes to secure’ fresh IMF loan program in July
As per details, Pakistan hopes to secure a new IMF loan program in July as the budget 2024-25 prepared under IMF conditions has also been approved, fulfilling one of the major requirements set by the international lender.
Sources indicate that the government is continuing to meet other conditions set by the IMF. Work is underway to increase the basic electricity tariff in light of NEPRA’s decision, with the new rates expected to be implemented in July.
Timely implementation of monthly and quarterly electricity adjustments is also being carried out.
Finance ministry officials anticipate that an agreement for the new loan program will be finalized in July. The new program is expected to range between $6 billion and $8 billion, although the exact amount has yet to be finalized.
The new loan program with the IMF is projected to span three years.
The National Assembly (NA) on July 28 approved the Federal Budget for the fiscal year 2024-25 with a total outlay of Rs18,870 billion.
arynews.tv
As per details, Pakistan hopes to secure a new IMF loan program in July as the budget 2024-25 prepared under IMF conditions has also been approved, fulfilling one of the major requirements set by the international lender.
Sources indicate that the government is continuing to meet other conditions set by the IMF. Work is underway to increase the basic electricity tariff in light of NEPRA’s decision, with the new rates expected to be implemented in July.
Timely implementation of monthly and quarterly electricity adjustments is also being carried out.
Finance ministry officials anticipate that an agreement for the new loan program will be finalized in July. The new program is expected to range between $6 billion and $8 billion, although the exact amount has yet to be finalized.
The new loan program with the IMF is projected to span three years.
The National Assembly (NA) on July 28 approved the Federal Budget for the fiscal year 2024-25 with a total outlay of Rs18,870 billion.
Pakistan 'hopes to secure' fresh IMF loan program in July
ISLAMABAD: The International Monetary Fund (IMF) has expressed satisfaction with the recent measures taken by the Pakistan government, paving the way for
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Pakistan and IMF near agreement on $8 billion bailout package
Pakistan and the International Monetary Fund (IMF) are advancing towards a crucial agreement on a new bailout package, anticipated to be finalized this month.Officials from Pakistan’s Ministry of Finance have indicated significant progress in negotiations, highlighting the government’s commitment to implementing reforms outlined in the new budget.
Minister of State for Finance, Ali Pervez Malik, expressed optimism about reaching an agreement with the IMF by July.
The proposed three-year bailout package is expected to provide Pakistan with between $6 to $8 billion, aimed at bolstering the country’s economic stability.
However, the acquisition of this new debt is contingent upon approval from the IMF Executive Board, which will review the agreement after a possible staff-level agreement is reached.
The Ministry of Finance underscored Pakistan’s resolve to continue economic reforms aligned with IMF recommendations, emphasizing the importance of securing financial support to navigate current economic challenges effectively.
Source: SAMAA
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Aurangzeb hopeful of deal with IMF this month on $6bn package
Claiming completion of almost all prior action before time and reaching an agreement, in principle, with all provinces over agricultural income tax, Finance Minister Muhammad Aurangzeb sounded hopeful on Thursday that talks with the International Monetary Fund (IMF) would yield a deal on a $6bn Extended Fund Facility (EFF) this month.
The government will subsequently request the lender to augment the package with a climate resilience facility (CRF).
Talking to journalists after briefing an in-camera meeting of the National Assembly’s Standing Committee on Finance & Revenue about the IMF negotiations, the finance minister said Pakistan wanted to secure more than $6bn EFF from IMF. Syed Naveed Qamar, a PPP member and former finance minister, presided over the meeting.
The finance minister said the government had met almost all prior actions and hopefully the new programme would be concluded this month. In reply to a question, the minister said the EFF’s size had not been finalised, but once it is in place, the government would approach the IMF staff for its augmentation with CRF on the eve of the first quarterly review.
Muhammad Aurangzeb said climate financing did not come up during ongoing discussions on EFF. The CRF is a relatively new facility carrying about $50bn total initial contributions from rich countries, at low rates, to help nations vulnerable to climate change carry out reforms for climate resilience.
The finance minister said the provinces had agreed “in principle” over income tax on agriculture, but since it was a provincial subject its process could not be completed without detailed consultations with them.
Later, Mr Naveed Qamar said it was not a question of agreement or resistance, but since “we want to take a step that has not been taken for so many years”, resistance to income tax on agriculture was understandable.
The finance minister agreed during the committee meeting that inflation was expected to increase slightly, but there was still room for reduction in the policy rate of the State Bank. He said central banks around the world did not like to reduce the policy rates which could go up soon and hence they take time.
Macroeconomic indicators
Muhammad Aurangzeb said macroeconomic indicators had improved in recent months and the IMF programme had helped restore financing from other multilaterals, as evident from recent approvals for the Dasu Dam by the World Bank.
“Nothing is being controlled artificially, there is no restriction on imports and all assumptions about devaluation have died down.”
The minister said tax had been imposed on real estate, as well as developers and retailers and pressures were being mounted from all segments as everyone wanted to stay away from the tax net.
Mr Aurangzeb said the IMF had asked for eliminating presumptive tax and tax on exporters was introduced because of that reason. “Exporters are worried, but we also have our own compulsions,” he said.
But all tax refunds were being paid to exporters and more than Rs260bn had been cleared so far, the minister said.
In reply to a question from a parliamentarian, the minister said a contributory pension system had been introduced for civil employees with effect from July 1 and it would be followed by a similar regime for the armed forces with effect from July 1 next year, since the government had to look into their service structure.
He said five ministries would be wound up during the current fiscal year.
Finance Secretary Imdadullah Bosal told the committee that government estimates put the unemployment rate at 6.3pc in 2020-21 while the World Bank estimated it at 10.3pc, compared to 8pc by the IMF and 8.2pc by the International Labour Organisation.
DAWN
Claiming completion of almost all prior action before time and reaching an agreement, in principle, with all provinces over agricultural income tax, Finance Minister Muhammad Aurangzeb sounded hopeful on Thursday that talks with the International Monetary Fund (IMF) would yield a deal on a $6bn Extended Fund Facility (EFF) this month.
The government will subsequently request the lender to augment the package with a climate resilience facility (CRF).
Talking to journalists after briefing an in-camera meeting of the National Assembly’s Standing Committee on Finance & Revenue about the IMF negotiations, the finance minister said Pakistan wanted to secure more than $6bn EFF from IMF. Syed Naveed Qamar, a PPP member and former finance minister, presided over the meeting.
The finance minister said the government had met almost all prior actions and hopefully the new programme would be concluded this month. In reply to a question, the minister said the EFF’s size had not been finalised, but once it is in place, the government would approach the IMF staff for its augmentation with CRF on the eve of the first quarterly review.
Muhammad Aurangzeb said climate financing did not come up during ongoing discussions on EFF. The CRF is a relatively new facility carrying about $50bn total initial contributions from rich countries, at low rates, to help nations vulnerable to climate change carry out reforms for climate resilience.
The finance minister said the provinces had agreed “in principle” over income tax on agriculture, but since it was a provincial subject its process could not be completed without detailed consultations with them.
Later, Mr Naveed Qamar said it was not a question of agreement or resistance, but since “we want to take a step that has not been taken for so many years”, resistance to income tax on agriculture was understandable.
The finance minister agreed during the committee meeting that inflation was expected to increase slightly, but there was still room for reduction in the policy rate of the State Bank. He said central banks around the world did not like to reduce the policy rates which could go up soon and hence they take time.
Macroeconomic indicators
Muhammad Aurangzeb said macroeconomic indicators had improved in recent months and the IMF programme had helped restore financing from other multilaterals, as evident from recent approvals for the Dasu Dam by the World Bank.
“Nothing is being controlled artificially, there is no restriction on imports and all assumptions about devaluation have died down.”
The minister said tax had been imposed on real estate, as well as developers and retailers and pressures were being mounted from all segments as everyone wanted to stay away from the tax net.
Mr Aurangzeb said the IMF had asked for eliminating presumptive tax and tax on exporters was introduced because of that reason. “Exporters are worried, but we also have our own compulsions,” he said.
But all tax refunds were being paid to exporters and more than Rs260bn had been cleared so far, the minister said.
In reply to a question from a parliamentarian, the minister said a contributory pension system had been introduced for civil employees with effect from July 1 and it would be followed by a similar regime for the armed forces with effect from July 1 next year, since the government had to look into their service structure.
He said five ministries would be wound up during the current fiscal year.
Finance Secretary Imdadullah Bosal told the committee that government estimates put the unemployment rate at 6.3pc in 2020-21 while the World Bank estimated it at 10.3pc, compared to 8pc by the IMF and 8.2pc by the International Labour Organisation.
DAWN
JaDed
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Why should Pakistan spend on Stadiums and hosting an event if they need to go to IMF for money if the logic in lavish weddings is to be believed.
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Pakistan, IMF clinch staff-level agreement on $7bn bailout deal
Cash-strapped Pakistan and the International Monetary Fund (IMF) reached a three-year, $7 billion aid package deal, the Washington-based institution said on Friday, giving much-needed respite to the country.
The new program, which needs to be validated by the fund's Executive Board, should enable Pakistan to "cement macroeconomic stability and create conditions for stronger, more inclusive and resilient growth," according to a statement.
“The Pakistani authorities and the IMF team have reached a staff-level agreement on a comprehensive program endorsed by the federal and provincial governments, that could be supported by a 37-month Extended Fund Arrangement (EFF) in the amount equivalent to SDR 5,320 million (or about $7 billion at current exchange rates).”
Faced with chronic mismanagement, Pakistan's economy has found itself on the brink, challenged by the Covid-19 pandemic, the effects of the war in Ukraine and supply difficulties that fuelled inflation, as well as record flooding that affected a third of the country in 2022.
With its foreign currency reserves dwindling, Pakistan found itself in a debt crisis and was forced to turn to the IMF, obtaining its first emergency loan in the summer of 2023.
The latest bailout, coming to Pakistan in the form of loans, follows a commitment by the government to implement reforms, including a major effort to broaden the country's tax base.
In this regard, the authorities plan to increase tax revenues through measures of 1.5% of GDP in FY25 and 3% of GDP over the program.
In particular, the recently approved FY25 budget targets an underlying general government primary surplus of 1% of GDP (2 percent in headline terms).
Revenue collections will be supported by simpler and fairer direct and indirect taxation, including by bringing net income from the retail, export, and agriculture sectors properly into the tax system.
At the same time, the FY25 budget provides additional resources to expand social protection by increasing both the generosity and coverage of BISP, education, and health spending.
In a nation of over 240 million people and where most jobs are in the informal sector, only 5.2 million filed income tax returns in 2022.
During the 2024-25 fiscal year which starts July 1, the Pakistan government aims to raise nearly $46 billion in taxes, a 40% increase from the previous year.
As part of the push, Pakistan's tax authority earlier this month blocked 210,000 SIM cards of users who have not filed tax returns in a bid to widen the revenue bracket.
Pakistan initiated discussions with IMF for the new multi-billion dollar loan agreement - its 24th bailout in more than six decades - to support its economic reform program.
While around 40% of the population already lives below the poverty line, the World Bank said in April it feared that 10 million additional Pakistanis would fall below this threshold.
Islamabad also aims to reduce its fiscal deficit by 1.5% to 5.9% in the coming year, heeding another key IMF demand.
The last loan - a nine-month $3 billion IMF deal - proved a lifeline.
But it came on condition of unpopular austerity measures, including an end to subsidies cushioning consumer costs.
In recent months, the current account balance has recovered slightly, high inflation is just starting to come down, but Pakistan's foreign debt remains very high at $242 billion.
Servicing it will still swallow up half of the government's income in 2024, according to the IMF.
The fund also anticipates 2% growth this year, with inflation still expected to reach nearly 25% year-on-year, before gradually coming down in 2025 and 2026.
GEO TV
Cash-strapped Pakistan and the International Monetary Fund (IMF) reached a three-year, $7 billion aid package deal, the Washington-based institution said on Friday, giving much-needed respite to the country.
The new program, which needs to be validated by the fund's Executive Board, should enable Pakistan to "cement macroeconomic stability and create conditions for stronger, more inclusive and resilient growth," according to a statement.
“The Pakistani authorities and the IMF team have reached a staff-level agreement on a comprehensive program endorsed by the federal and provincial governments, that could be supported by a 37-month Extended Fund Arrangement (EFF) in the amount equivalent to SDR 5,320 million (or about $7 billion at current exchange rates).”
Faced with chronic mismanagement, Pakistan's economy has found itself on the brink, challenged by the Covid-19 pandemic, the effects of the war in Ukraine and supply difficulties that fuelled inflation, as well as record flooding that affected a third of the country in 2022.
With its foreign currency reserves dwindling, Pakistan found itself in a debt crisis and was forced to turn to the IMF, obtaining its first emergency loan in the summer of 2023.
The latest bailout, coming to Pakistan in the form of loans, follows a commitment by the government to implement reforms, including a major effort to broaden the country's tax base.
In this regard, the authorities plan to increase tax revenues through measures of 1.5% of GDP in FY25 and 3% of GDP over the program.
In particular, the recently approved FY25 budget targets an underlying general government primary surplus of 1% of GDP (2 percent in headline terms).
Revenue collections will be supported by simpler and fairer direct and indirect taxation, including by bringing net income from the retail, export, and agriculture sectors properly into the tax system.
At the same time, the FY25 budget provides additional resources to expand social protection by increasing both the generosity and coverage of BISP, education, and health spending.
In a nation of over 240 million people and where most jobs are in the informal sector, only 5.2 million filed income tax returns in 2022.
During the 2024-25 fiscal year which starts July 1, the Pakistan government aims to raise nearly $46 billion in taxes, a 40% increase from the previous year.
As part of the push, Pakistan's tax authority earlier this month blocked 210,000 SIM cards of users who have not filed tax returns in a bid to widen the revenue bracket.
Pakistan initiated discussions with IMF for the new multi-billion dollar loan agreement - its 24th bailout in more than six decades - to support its economic reform program.
While around 40% of the population already lives below the poverty line, the World Bank said in April it feared that 10 million additional Pakistanis would fall below this threshold.
Islamabad also aims to reduce its fiscal deficit by 1.5% to 5.9% in the coming year, heeding another key IMF demand.
The last loan - a nine-month $3 billion IMF deal - proved a lifeline.
But it came on condition of unpopular austerity measures, including an end to subsidies cushioning consumer costs.
In recent months, the current account balance has recovered slightly, high inflation is just starting to come down, but Pakistan's foreign debt remains very high at $242 billion.
Servicing it will still swallow up half of the government's income in 2024, according to the IMF.
The fund also anticipates 2% growth this year, with inflation still expected to reach nearly 25% year-on-year, before gradually coming down in 2025 and 2026.
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Pakistan is never getting out of this circle of loans until the people do accountability of themselves first.
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The IMF doesn't want to keep lending to Pakistan in perpetuity either. It's member's that the IMF is lending. India has $12B of SDR with the IMF which means India is also indirectly lending a few 100 million to Pakistan which I can't imagine the Modi government is happy about.
The IMF has given Pakistan a pretty solid prescription to climb out of this hole. Raise tax revenue, increase capital expenditure. If Pakistan lacks the political will to do this the right way i.e tax land, tax trading and professional income, tax high agricultural income and instead chooses to increase tax on those it already taxes, you can't blame the IMF.
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Not blaming IMF. I am blaming the government and the citizens of Pakistan who are responsible for this mess. Especially this government is responsible that is taking loans and not utilizing it instead they are saving this many for themselves and their upcoming generation. Corrpution at its peak.
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‘Now is the time’: Must ensure new IMF programme is the last one, says PM Shehbaz
Prime Minister Shehbaz Sharif on Saturday said that Pakistan needed to embark on a “long and difficult journey” to prevent knocking on the doors of the International Monetary Fund (IMF) again.
“If we want to get rid of loans, we need to consider this IMF programme as the final one,” he said.
In the wee hours of Saturday, the international lender announced that Pakistan and the Fund had reached a three-year $7 billion aid package deal, giving much-needed respite to the nation.
The programme, which needs to be approved by the IMF’s Executive Board, should enable Pakistan to “cement macroeconomic stability and create conditions for stronger, more inclusive and resilient growth,” it said in a statement.
Coming to Pakistan in the form of loans, the latest bailout follows a commitment by the government to implement reforms, including a major effort to broaden the country’s tax base.
Addressing a meeting at the headquarters of the Federal Board of Revenue (FBR) today, the premier congratulated Finance Minister Muhammad Aurangzeb and other cabinet members for clinching the programme.
“This cabinet has done a great deal of work to make sure we achieved this goal,” he said. “But, we need to pursue a long and difficult journey to augment our macroeconomic numbers. We will have to make sacrifices.
“Now is the time, it is our responsibility to act speedily and work tirelessly. Only then will this be the final IMF programme in this country,” PM Shehbaz said.
He stated that putting extra taxes on taxpayers was like a “premium for those who don’t pay [taxes] and it’s a penalty for honest taxpayers”. He added that the government needed to adopt new strategies and employ advanced technology used by tax authorities throughout the world.
The PM expressed that it brought him pain whenever Pakistan had to approach the World Bank and other institutions for loans. “We collect billions, trillions and we’re still going to the World Bank and others. A country cannot run like this.”
“With the finance minister and the FBR chairman as my witness, this is the last time I’m saying it: whatever you need in the public interest to collect the last penny, which is our due right, I will spend whatever amount of money to acquire the gadgetries required for this purpose. It is our national interest and our duty,” he affirmed.
The prime minister further emphasised that now was the time for a “paradigm shift”.
“We need to tighten our belts and serve the public,” he said. “For the first and last time, we need to act in the national interest. If there’s any honest mistake, we’ll rectify that. I will quit if I need to, but I will not come under any pressure, I want that to be loud and clear.”
Earlier, Geo News quoted the finance minister as saying that the new IMF deal would aid Pakistan in achieving macroeconomic stability.
Under the programme “we need to ensure structural reforms and bring self-sustainability in areas of public finance, energy, and state-owned institutions”, he said.
IMF statement
Faced with chronic mismanagement, Pakistan’s economy has found itself on the brink, challenged by the Covid-19 pandemic, the effects of the war in Ukraine and supply difficulties that fuelled inflation, as well as record flooding that affected a third of the country in 2022.
With its foreign currency reserves dwindling, Pakistan found itself in a debt crisis and was forced to turn to the IMF, obtaining its first emergency loan in the summer of 2023.
The IMF statement issued earlier today quoted the Fund’s mission chief to Pakistan, Nathan Proter, as saying that the new programme “aims to capitalise on the hard-won macroeconomic stability achieved over the past year by furthering efforts to strengthen public finances, reduce inflation, rebuild external buffers and remove economic distortions to spur private sector-led growth”.
“In this regard, the authorities plan to increase tax revenues through measures of 1.5 per cent of GDP in FY25 and 3 per cent of GDP over the programme,” the lender said. The increase in revenue collections will be achieved through “simpler and fairer direct and indirect taxation, including by bringing net income from the retail, export, and agriculture sectors properly into the tax system”.
The statement added that federal and provincial governments have agreed to rebalance spending activities in line with the 18th Constitution Amendment by signing a ‘National Fiscal Pact’. Under the agreement, subjects including education spending, health, social protection, and regional public infrastructure investment will be devolved to provinces.
The provinces have already committed to “fully harmonising their Agriculture Income Tax regimes through legislative changes” with the federal and corporate income tax regimes. The move will be implemented from Jan 1, 2025.
The government will also improve the power sector’s viability and minimise its losses through timely tariff adjustment, reforms, and refraining from further unnecessary expansion of generation capacity.
“The authorities remain committed to undertaking targeted subsidy reforms and replace cross-subsidies to households with direct and targeted BISP support.”
The authorities will improve SOE operations and management as well as privatisation, in which the most profitable entities will be prioritised.
The government is also working towards “phasing out” incentives to Special Economic Zones, agricultural support prices and related subsidies, while refraining from new regulatory or tax-based incentives, or any guaranteed return “that could distort the investment landscape. “The authorities have also committed to advance anti-corruption as well as governance and transparency reforms, and gradually liberalise trade policy,” the statement concluded.
DAWN
Prime Minister Shehbaz Sharif on Saturday said that Pakistan needed to embark on a “long and difficult journey” to prevent knocking on the doors of the International Monetary Fund (IMF) again.
“If we want to get rid of loans, we need to consider this IMF programme as the final one,” he said.
In the wee hours of Saturday, the international lender announced that Pakistan and the Fund had reached a three-year $7 billion aid package deal, giving much-needed respite to the nation.
The programme, which needs to be approved by the IMF’s Executive Board, should enable Pakistan to “cement macroeconomic stability and create conditions for stronger, more inclusive and resilient growth,” it said in a statement.
Coming to Pakistan in the form of loans, the latest bailout follows a commitment by the government to implement reforms, including a major effort to broaden the country’s tax base.
Addressing a meeting at the headquarters of the Federal Board of Revenue (FBR) today, the premier congratulated Finance Minister Muhammad Aurangzeb and other cabinet members for clinching the programme.
“This cabinet has done a great deal of work to make sure we achieved this goal,” he said. “But, we need to pursue a long and difficult journey to augment our macroeconomic numbers. We will have to make sacrifices.
“Now is the time, it is our responsibility to act speedily and work tirelessly. Only then will this be the final IMF programme in this country,” PM Shehbaz said.
He stated that putting extra taxes on taxpayers was like a “premium for those who don’t pay [taxes] and it’s a penalty for honest taxpayers”. He added that the government needed to adopt new strategies and employ advanced technology used by tax authorities throughout the world.
The PM expressed that it brought him pain whenever Pakistan had to approach the World Bank and other institutions for loans. “We collect billions, trillions and we’re still going to the World Bank and others. A country cannot run like this.”
“With the finance minister and the FBR chairman as my witness, this is the last time I’m saying it: whatever you need in the public interest to collect the last penny, which is our due right, I will spend whatever amount of money to acquire the gadgetries required for this purpose. It is our national interest and our duty,” he affirmed.
The prime minister further emphasised that now was the time for a “paradigm shift”.
“We need to tighten our belts and serve the public,” he said. “For the first and last time, we need to act in the national interest. If there’s any honest mistake, we’ll rectify that. I will quit if I need to, but I will not come under any pressure, I want that to be loud and clear.”
Earlier, Geo News quoted the finance minister as saying that the new IMF deal would aid Pakistan in achieving macroeconomic stability.
Under the programme “we need to ensure structural reforms and bring self-sustainability in areas of public finance, energy, and state-owned institutions”, he said.
IMF statement
Faced with chronic mismanagement, Pakistan’s economy has found itself on the brink, challenged by the Covid-19 pandemic, the effects of the war in Ukraine and supply difficulties that fuelled inflation, as well as record flooding that affected a third of the country in 2022.
With its foreign currency reserves dwindling, Pakistan found itself in a debt crisis and was forced to turn to the IMF, obtaining its first emergency loan in the summer of 2023.
The IMF statement issued earlier today quoted the Fund’s mission chief to Pakistan, Nathan Proter, as saying that the new programme “aims to capitalise on the hard-won macroeconomic stability achieved over the past year by furthering efforts to strengthen public finances, reduce inflation, rebuild external buffers and remove economic distortions to spur private sector-led growth”.
“In this regard, the authorities plan to increase tax revenues through measures of 1.5 per cent of GDP in FY25 and 3 per cent of GDP over the programme,” the lender said. The increase in revenue collections will be achieved through “simpler and fairer direct and indirect taxation, including by bringing net income from the retail, export, and agriculture sectors properly into the tax system”.
The statement added that federal and provincial governments have agreed to rebalance spending activities in line with the 18th Constitution Amendment by signing a ‘National Fiscal Pact’. Under the agreement, subjects including education spending, health, social protection, and regional public infrastructure investment will be devolved to provinces.
The provinces have already committed to “fully harmonising their Agriculture Income Tax regimes through legislative changes” with the federal and corporate income tax regimes. The move will be implemented from Jan 1, 2025.
The government will also improve the power sector’s viability and minimise its losses through timely tariff adjustment, reforms, and refraining from further unnecessary expansion of generation capacity.
“The authorities remain committed to undertaking targeted subsidy reforms and replace cross-subsidies to households with direct and targeted BISP support.”
The authorities will improve SOE operations and management as well as privatisation, in which the most profitable entities will be prioritised.
The government is also working towards “phasing out” incentives to Special Economic Zones, agricultural support prices and related subsidies, while refraining from new regulatory or tax-based incentives, or any guaranteed return “that could distort the investment landscape. “The authorities have also committed to advance anti-corruption as well as governance and transparency reforms, and gradually liberalise trade policy,” the statement concluded.
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IMF deal: relief but no cause for celebration, says ex-SBP chief
The $7 billion agreement with the International Monetary Fund (IMF) will provide much-needed relief to Pakistan. However, experts caution that this is not a cause for celebration.
Murtaza Syed, a former acting governor of the State Bank of Pakistan, noted in a tweet that for this staff-level agreement (SLA) — Pakistan’s 25th with the global lender — to become official, the country requires financing assurances from its development and bilateral partners.
“This is Fund-speak for securing secret debt relief from China. It is wrong, incomplete, and dangerous,” he warned. “It is wrong because Pakistan’s debt problem is not a Chinese debt trap.”
Murtaza Syed, who now works for the Beijing-based Asian Infrastructure Investment Bank (AIIB), acknowledged that while Pakistan does have unsustainable debt, the foreign creditors are much more diversified. He pointed out that Pakistan owes more to multilateral development banks like the World Bank, IMF and the Paris Club than to China.
Comparing Pakistan to other countries facing similar debt stress, he argued: “We are not in the same boat as those where China is the main creditor.”
He explained that the IMF deal is incomplete because Pakistan needs debt relief from all its major external creditors, including multilateral development banks, bondholders, the Paris Club and China.
“On their own, our exposures to China are relatively mild, so it cannot solve our debt problems on its own. China is only one part of the larger pie,” he wrote.
“It is dangerous because it makes Pakistan vulnerable to geopolitics and merely kicks the can down the road, forcing an impossible level of austerity (requiring us to increase tax revenues by 1pc of GDP every year) that will kill economic growth and leave no space for reform,” he added.
Murtaza Syed argued that the deal is also dangerous for Pakistan’s external creditors, as this “extend and pretend game will only lead to bigger haircuts when the eventual reckoning comes”.
Noting that this pattern has been seen around the world time and time again, he argued that this is not just a China issue. “Pretending it is will only deliver partial debt relief.”
He warned that the new arrangement with the IMF would still require impossible austerity and invite social turmoil: “The stakes are high. And the hour is getting late. Let us hope all stakeholders can read the room.”
He claimed that the IMF knows from its experiences that it is far better to bite the bullet now and organise a coordinated debt relief package involving all creditors doing their fair share. This happened in 2000 and “must happen again, and we mustn’t waste it again,” he added.
Michael Kugelman, a scholar of South Asian affairs at Washington’s Wilson Center, noted that while endorsing the plan, the IMF praised Pakistan’s “hard-won macroeconomic stability achieved over the last year”.
He observed that for Islamabad, Friday “started with a blow dealt by the Supreme Court and ended with a boost provided by a critical donor”.
Akbar S. Zaidi, Executive Director at the Institute of Business Administration (IBA), wrote that the IMF package is nothing to celebrate, as “it is a recognition of our failures. We are constantly failing by going to the IMF again and again”.
Reporting on the agreement, The Financial Times (FT) noted that “Pakistan has suffered one of Asia’s worst recent economic crises,” with the country of 240 million teetering on the brink of default last year before the IMF granted a short-term $3bn rescue package.
“Inflation surged as high as 38 per cent as Islamabad struggled to bring down a ruinous debt burden, which swallowed 57pc of government revenue in interest payments,” FT noted.
DAWN
The $7 billion agreement with the International Monetary Fund (IMF) will provide much-needed relief to Pakistan. However, experts caution that this is not a cause for celebration.
Murtaza Syed, a former acting governor of the State Bank of Pakistan, noted in a tweet that for this staff-level agreement (SLA) — Pakistan’s 25th with the global lender — to become official, the country requires financing assurances from its development and bilateral partners.
“This is Fund-speak for securing secret debt relief from China. It is wrong, incomplete, and dangerous,” he warned. “It is wrong because Pakistan’s debt problem is not a Chinese debt trap.”
Murtaza Syed, who now works for the Beijing-based Asian Infrastructure Investment Bank (AIIB), acknowledged that while Pakistan does have unsustainable debt, the foreign creditors are much more diversified. He pointed out that Pakistan owes more to multilateral development banks like the World Bank, IMF and the Paris Club than to China.
Comparing Pakistan to other countries facing similar debt stress, he argued: “We are not in the same boat as those where China is the main creditor.”
He explained that the IMF deal is incomplete because Pakistan needs debt relief from all its major external creditors, including multilateral development banks, bondholders, the Paris Club and China.
“On their own, our exposures to China are relatively mild, so it cannot solve our debt problems on its own. China is only one part of the larger pie,” he wrote.
“It is dangerous because it makes Pakistan vulnerable to geopolitics and merely kicks the can down the road, forcing an impossible level of austerity (requiring us to increase tax revenues by 1pc of GDP every year) that will kill economic growth and leave no space for reform,” he added.
Murtaza Syed argued that the deal is also dangerous for Pakistan’s external creditors, as this “extend and pretend game will only lead to bigger haircuts when the eventual reckoning comes”.
Noting that this pattern has been seen around the world time and time again, he argued that this is not just a China issue. “Pretending it is will only deliver partial debt relief.”
He warned that the new arrangement with the IMF would still require impossible austerity and invite social turmoil: “The stakes are high. And the hour is getting late. Let us hope all stakeholders can read the room.”
He claimed that the IMF knows from its experiences that it is far better to bite the bullet now and organise a coordinated debt relief package involving all creditors doing their fair share. This happened in 2000 and “must happen again, and we mustn’t waste it again,” he added.
Michael Kugelman, a scholar of South Asian affairs at Washington’s Wilson Center, noted that while endorsing the plan, the IMF praised Pakistan’s “hard-won macroeconomic stability achieved over the last year”.
He observed that for Islamabad, Friday “started with a blow dealt by the Supreme Court and ended with a boost provided by a critical donor”.
Akbar S. Zaidi, Executive Director at the Institute of Business Administration (IBA), wrote that the IMF package is nothing to celebrate, as “it is a recognition of our failures. We are constantly failing by going to the IMF again and again”.
Reporting on the agreement, The Financial Times (FT) noted that “Pakistan has suffered one of Asia’s worst recent economic crises,” with the country of 240 million teetering on the brink of default last year before the IMF granted a short-term $3bn rescue package.
“Inflation surged as high as 38 per cent as Islamabad struggled to bring down a ruinous debt burden, which swallowed 57pc of government revenue in interest payments,” FT noted.
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IMF sees Pakistan economy expanding at 3.5pc in FY25
The International Monetary Fund (IMF) on Tuesday maintained Pakistan’s growth forecast at 3.5 per cent for the current fiscal year but indicated slower global disinflation to keep pressure on the masses amid higher for even longer interest rates.
The IMF’s unchanged growth forecast at 3.5pc previously made in April this year has been reinforced almost a week after its staff reached an agreement with Pakistan authorities on $7bn worth of a 37-month bailout based on detailed deliberations and exchange of financial and economic data including 2024-25 budget.
The government has set 3.6pc growth target for the current fiscal year.
In its World Economic Outlook Update 2024, the IMF noted that overall risks to the global outlook remained balanced, as reported in April, but some near-term risks had gained prominence with implications for emerging economies and oil-importing countries like Pakistan.
These include upside risks to inflation that stem from a lack of progress on services disinflation and price pressures emanating from renewed trade or geopolitical tensions.
IMF staff projections are based on upward revisions to commodity prices, including a rise in non-fuel prices by 5pc in 2024. The fund expected the energy prices to fall by about 4.6pc in 2024, less than projected in April, “reflecting elevated oil prices from deep cuts by Opec+ (the Organisation of the Petroleum Exporting Countries, including Russia and other non-Opec oil exporters) and reduced, but still present, price pressure from the Middle East conflict”.
It said the monetary policy rates of major central banks were still expected to decline in the second half of 2024, with divergence in the pace of normalisation reflecting varied inflation circumstances. “The risk of elevated inflation has raised the prospects of higher-for-even-longer interest rates, which in turn increases external, fiscal, and financial risks”, the IMF said adding the prolonged dollar appreciation arising from rate disparities could disrupt capital flows and impede planned monetary policy easing, which could adversely impact growth.
“Persistently high interest rates could raise borrowing costs further and affect financial stability if fiscal improvements do not offset higher real rates amid lower potential growth”, the IMF.
Pakistan is among the top nations suffering from high borrowing needs and has higher interest rates amid low growth cycles. Almost all of government revenue earnings are consumed by debt servicing.
The report noted that policies that promote multilateralism and faster implementation of macro-structural reforms could boost supply gains, productivity, and growth, with positive spillovers worldwide.
Advice for central banks
Therefore, the IMF called for future-proofing the economy by persevering with restoring price stability and addressing the legacies of recent crises, including replenishing lost buffers and durably uplifting growth. In the near term, this will require careful calibration and sequencing of the policy mix.
It advised the central banks should to refrain from easing too early and remain open to further tightening should it become necessary. As the space for fiscal manoeuvre narrows, commitments to achieving fiscal consolidation targets should be earnestly adhered to, aided by sound fiscal frameworks and resource mobilization, the IMF suggested.
In emerging markets and developing economies, recent policy divergences highlight the need to manage the risks of currency and capital flow volatility. Given that economic fundamentals remain the main factor in dollar appreciation, the appropriate response is to allow the exchange rate to adjust, while using monetary policy to keep inflation close to target.
Foreign reserves should be used prudently and preserved to deal with potentially worse outflows in the future. To the extent possible, macro-prudential policies should mitigate vulnerabilities from large exposures to foreign-currency-denominated debt. Near-term challenges aside, policymakers must act now to revitalise declining medium-term growth prospects.
While emigration of the young and educated population can take a toll on source countries, the costs can be mitigated. Policies that help leverage diaspora networks, maximise the benefits from remittances, and expand domestic labour market opportunities are possible avenues.
DAWN
The International Monetary Fund (IMF) on Tuesday maintained Pakistan’s growth forecast at 3.5 per cent for the current fiscal year but indicated slower global disinflation to keep pressure on the masses amid higher for even longer interest rates.
The IMF’s unchanged growth forecast at 3.5pc previously made in April this year has been reinforced almost a week after its staff reached an agreement with Pakistan authorities on $7bn worth of a 37-month bailout based on detailed deliberations and exchange of financial and economic data including 2024-25 budget.
The government has set 3.6pc growth target for the current fiscal year.
In its World Economic Outlook Update 2024, the IMF noted that overall risks to the global outlook remained balanced, as reported in April, but some near-term risks had gained prominence with implications for emerging economies and oil-importing countries like Pakistan.
These include upside risks to inflation that stem from a lack of progress on services disinflation and price pressures emanating from renewed trade or geopolitical tensions.
IMF staff projections are based on upward revisions to commodity prices, including a rise in non-fuel prices by 5pc in 2024. The fund expected the energy prices to fall by about 4.6pc in 2024, less than projected in April, “reflecting elevated oil prices from deep cuts by Opec+ (the Organisation of the Petroleum Exporting Countries, including Russia and other non-Opec oil exporters) and reduced, but still present, price pressure from the Middle East conflict”.
It said the monetary policy rates of major central banks were still expected to decline in the second half of 2024, with divergence in the pace of normalisation reflecting varied inflation circumstances. “The risk of elevated inflation has raised the prospects of higher-for-even-longer interest rates, which in turn increases external, fiscal, and financial risks”, the IMF said adding the prolonged dollar appreciation arising from rate disparities could disrupt capital flows and impede planned monetary policy easing, which could adversely impact growth.
“Persistently high interest rates could raise borrowing costs further and affect financial stability if fiscal improvements do not offset higher real rates amid lower potential growth”, the IMF.
Pakistan is among the top nations suffering from high borrowing needs and has higher interest rates amid low growth cycles. Almost all of government revenue earnings are consumed by debt servicing.
The report noted that policies that promote multilateralism and faster implementation of macro-structural reforms could boost supply gains, productivity, and growth, with positive spillovers worldwide.
Advice for central banks
Therefore, the IMF called for future-proofing the economy by persevering with restoring price stability and addressing the legacies of recent crises, including replenishing lost buffers and durably uplifting growth. In the near term, this will require careful calibration and sequencing of the policy mix.
It advised the central banks should to refrain from easing too early and remain open to further tightening should it become necessary. As the space for fiscal manoeuvre narrows, commitments to achieving fiscal consolidation targets should be earnestly adhered to, aided by sound fiscal frameworks and resource mobilization, the IMF suggested.
In emerging markets and developing economies, recent policy divergences highlight the need to manage the risks of currency and capital flow volatility. Given that economic fundamentals remain the main factor in dollar appreciation, the appropriate response is to allow the exchange rate to adjust, while using monetary policy to keep inflation close to target.
Foreign reserves should be used prudently and preserved to deal with potentially worse outflows in the future. To the extent possible, macro-prudential policies should mitigate vulnerabilities from large exposures to foreign-currency-denominated debt. Near-term challenges aside, policymakers must act now to revitalise declining medium-term growth prospects.
While emigration of the young and educated population can take a toll on source countries, the costs can be mitigated. Policies that help leverage diaspora networks, maximise the benefits from remittances, and expand domestic labour market opportunities are possible avenues.
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IMF to discuss $7 billion bailout for Pakistan in August
The International Monetary Fund (IMF) Executive Board is expected to convene in mid-August to discuss the $7 billion bailout package for Pakistan.
A staff-level agreement between Pakistan and the IMF was reached on July 12.
Sources inside the Ministry of Finance indicate that the IMF board is expected to give its final approval within four to six weeks following the staff-level agreement.
However, they added that Pakistan must secure external financing assurances before the board meeting.
Discussions on funding to address climate change and natural disaster risks are anticipated soon.
The IMF has indicated consideration of Pakistan's proposed request for climate financing.
Sources further disclosed that Pakistan must identify long-term priority projects related to climate change.
The IMF's Resilience and Sustainability Facility (RSF) programme offers affordable, long-term financing.
To achieve these goals, Pakistan will need to collaborate with other global institutions, according to the Ministry of Finance.
EXPRESS TRIBUNE
The International Monetary Fund (IMF) Executive Board is expected to convene in mid-August to discuss the $7 billion bailout package for Pakistan.
A staff-level agreement between Pakistan and the IMF was reached on July 12.
Sources inside the Ministry of Finance indicate that the IMF board is expected to give its final approval within four to six weeks following the staff-level agreement.
However, they added that Pakistan must secure external financing assurances before the board meeting.
Discussions on funding to address climate change and natural disaster risks are anticipated soon.
The IMF has indicated consideration of Pakistan's proposed request for climate financing.
Sources further disclosed that Pakistan must identify long-term priority projects related to climate change.
The IMF's Resilience and Sustainability Facility (RSF) programme offers affordable, long-term financing.
To achieve these goals, Pakistan will need to collaborate with other global institutions, according to the Ministry of Finance.
EXPRESS TRIBUNE
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The rubber stamp from the Executive board is more or less guaranteed and Pakistan will get it's $7B but it's tough to see how this is sustainable.
I read a recent Financial Times article
Over the next 5 years, 6.5% of Pakistan's GDP will go towards interest on debt to external parties
Three times as much as it spends on education for it's citizens
Six times as much as it spends on health
Twice as much as it spends on capital investment
This is crazy stuff. How is it possible to survive as country? Pakistan needs to find a way to bring this to a head and force some kind of forgiveness. Maybe start with China since it's a close friend and use the reduction as leverage to get all other bilateral multilateral creditors to also agree to some kind of interest freeze at the least.
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China to support Pakistan in securing IMF deal approval: Aurangzeb
Finance Minister Muhammad Aurangzeb announced that China will support Pakistan in securing approval for the International Monetary Fund (IMF) agreement.
The statement was made during a press conference in Islamabad, highlighting ongoing efforts to improve the country's economic situation.
FM Aurangzeb emphasised the need to provide facilities to the public if taxes are to be increased, pointing out that both the United States and China are vital partners for Pakistan.
Discussions on local tax matters are currently underway.
He stated that efforts are being made to ease the tax burden on the lower-income population while simplifying the taxation process for traders.
FM Aurangzeb criticised tax defaulters for not being loyal to the nation, urging that tax payments are crucial for economic stability.
The finance minister noted that reforms in the Federal Board of Revenue (FBR) are discussed weekly, and provincial governments are encouraged to legislate taxes in the agricultural sector.
He mentioned that non-filers would no longer receive direct notices from tax officers, reducing harassment and ensuring a centralised notification system.
FM Aurangzeb highlighted the need to streamline government expenditures and discussed potential mergers of certain ministries.
He also mentioned detailed discussions with Chinese officials on energy, including the conversion of coal power plants to local coal and the issuance of Panda Bonds.
Chinese ministers praised Pakistan's negotiations with the IMF and assured support for the agreement's approval by the IMF board.
The finance minister stressed the importance of simplifying tax processes, comparing it to the straightforward tax systems in other countries, where annual forms provide clear tax details without the need for legal assistance.
China to support Pakistan in securing IMF deal approval: Aurangzeb | The Express Tribune
Finance Minister Mohammad Aurangzeb highlights steps for economic stability
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Pakistan paid over $3.5b in interest to IMF
In the last forty years, Pakistan has paid over $3.5 billion in interest on loans to the International Monetary Fund (IMF).
This revelation was made during a meeting of the Senate's Standing Committee on Economic Affair, chaired by Senator Saifullah Abro, on Thursday at the Parliament House. The Ministry of Finance presented details of the loans and repayments made to the IMF so far.
During the briefing by officials from the Ministry of Finance and the State Bank of Pakistan, it was disclosed that Pakistan has paid over $3.60 billion in interest to the IMF.
The documents revealed that the interest paid amounts to over Rs1,000 billion in Pakistani currency. Over the past 30 years, Pakistan has borrowed approximately $29 billion from the IMF and has repaid more than $21.72 billion in the same period.
In the last four years alone, Pakistan borrowed over $6.26 billion from the IMF and repaid $4.52 billion. Additionally, in the last four years, Pakistan has paid over $1.10 billion in interest to the IMF.
In 2024, Pakistan borrowed $1.35 billion Special Drawing Rights (SDRs) from the IMF and repaid $646.69 million SDRs.
SDRs are an international reserve asset created by the IMF. They are used to supplement the official reserves of member countries and can be exchanged among governments for freely usable currencies in times of need. The value of SDRs is based on a basket of major international currencies.
Committee member Senator Kamil Ali Agha criticized the Ministry of Finance and SBP officials, stating, "Don't tell us stories; tell us how much we have borrowed from the IMF and how much we still have to repay. We are always told that the IMF comes to fix us."
He questioned how much interest had been paid to the IMF, to which the Ministry of Finance officials responded that Pakistan borrowed $19.55 billion SDRs from the IMF since 1984 and repaid $14.71 billion SDRs, with $2.44 billion SDRs paid in interest.
The committee chairman remarked that the country is not getting destroyed on its own "but we all have a part in its destruction". The committee later sought details of every programme with the IMF, stating that the committee should be informed about what has happened in each programme.
The Ministry of Economic Affairs officials briefed the Senate's committee that there are 58 projects in the country running on loans from the World Bank, with a commitment of $14,806 million.
So far, $6,162 million has been disbursed for these projects. The meeting was informed that a 762 kV transmission line from Dasu to Islamabad will be laid, with a World Bank commitment of $700 million, out of which $112 million has already been disbursed. The Dasu-Islamabad transmission line project is expected to be completed by June 30, 2025.
The Tarbela Fourth Extension Project has a commitment of $390 million, with $159 million already disbursed. The Tarbela Fourth Extension Hydropower Project is expected to be completed by September 30, 2027.
EXPRESS TRIBUNE
In the last forty years, Pakistan has paid over $3.5 billion in interest on loans to the International Monetary Fund (IMF).
This revelation was made during a meeting of the Senate's Standing Committee on Economic Affair, chaired by Senator Saifullah Abro, on Thursday at the Parliament House. The Ministry of Finance presented details of the loans and repayments made to the IMF so far.
During the briefing by officials from the Ministry of Finance and the State Bank of Pakistan, it was disclosed that Pakistan has paid over $3.60 billion in interest to the IMF.
The documents revealed that the interest paid amounts to over Rs1,000 billion in Pakistani currency. Over the past 30 years, Pakistan has borrowed approximately $29 billion from the IMF and has repaid more than $21.72 billion in the same period.
In the last four years alone, Pakistan borrowed over $6.26 billion from the IMF and repaid $4.52 billion. Additionally, in the last four years, Pakistan has paid over $1.10 billion in interest to the IMF.
In 2024, Pakistan borrowed $1.35 billion Special Drawing Rights (SDRs) from the IMF and repaid $646.69 million SDRs.
SDRs are an international reserve asset created by the IMF. They are used to supplement the official reserves of member countries and can be exchanged among governments for freely usable currencies in times of need. The value of SDRs is based on a basket of major international currencies.
Committee member Senator Kamil Ali Agha criticized the Ministry of Finance and SBP officials, stating, "Don't tell us stories; tell us how much we have borrowed from the IMF and how much we still have to repay. We are always told that the IMF comes to fix us."
He questioned how much interest had been paid to the IMF, to which the Ministry of Finance officials responded that Pakistan borrowed $19.55 billion SDRs from the IMF since 1984 and repaid $14.71 billion SDRs, with $2.44 billion SDRs paid in interest.
The committee chairman remarked that the country is not getting destroyed on its own "but we all have a part in its destruction". The committee later sought details of every programme with the IMF, stating that the committee should be informed about what has happened in each programme.
The Ministry of Economic Affairs officials briefed the Senate's committee that there are 58 projects in the country running on loans from the World Bank, with a commitment of $14,806 million.
So far, $6,162 million has been disbursed for these projects. The meeting was informed that a 762 kV transmission line from Dasu to Islamabad will be laid, with a World Bank commitment of $700 million, out of which $112 million has already been disbursed. The Dasu-Islamabad transmission line project is expected to be completed by June 30, 2025.
The Tarbela Fourth Extension Project has a commitment of $390 million, with $159 million already disbursed. The Tarbela Fourth Extension Hydropower Project is expected to be completed by September 30, 2027.
EXPRESS TRIBUNE
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PTI led in IMF interest payments, PPP accumulated most debt: report
The Federal Ministry of Economic Affairs has released significant data revealing which political party's government in Pakistan borrowed the most from the International Monetary Fund (IMF) and which repaid the most loans and interest.
In a briefing to the National Assembly's Standing Committee on Saturday, officials from the Ministry of Economic Affairs disclosed that the Pakistan Peoples Party (PPP) borrowed over $7.72 billion from the IMF, ranking it at the top of the list of borrowing governments.
The Pakistan Muslim League-Nawaz (PML-N) ranked second, having borrowed a total of $6.48 billion, while the Pakistan Tehreek-e-Insaf (PTI) came third, taking loans amounting to $6 billion, just $480 million less than the PML-N.
In terms of repayments, the PML-N government returned the most, with over $5.92 billion paid back to the IMF, putting it in the first position. The PTI government, however, topped the list for the most interest paid, having paid $791 million in a single term.
Officials informed the Standing Committee that during its tenure from 2008 to 2013, the PPP government borrowed over 5.23 billion in Special Drawing Rights (SDR) from the IMF, which amounts to more than $7.72 billion in US currency. Consequently, the PPP is the leading party in terms of borrowing.
The statistics presented to the Standing Committee showed that the PPP government repaid over $3 billion of the IMF loan and paid more than $484 million in interest.
Similarly, during its tenure from 2013 to 2018, the PML-N government borrowed 4.39 billion SDRs, translating to more than $6.48 billion. Over this five-year period, they repaid more than 4 billion SDRs, amounting to over $5.92 billion. The PML-N paid more than $317 million in interest during these five years.
The PTI government, from 2018 to 2022, borrowed over 4.05 billion SDRs, which translates to approximately $6 billion in loans. During this time, the PTI repaid 2.72 billion SDRs, equivalent to $4.02 billion in U.S. currency. From 2018 to 2022, PTI topped the list of interest payments to the IMF, having paid $791 million.
PTI led in IMF interest payments, PPP accumulated most debt: report | The Express Tribune
PML-N government returned the most, with over $5.92 billion paid back to the IMF
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Aurangzeb expects IMF staff-level agreement by month's end
Finance Minister Mohammad Aurangzeb on Monday announced that the country is expected to secure the International Monetary Fund's (IMF) staff-level agreement approval by the end of August.
Speaking at an event in Islamabad, Aurangzeb emphasised the importance of this agreement for Pakistan's economic stability and highlighted plans for climate finance discussions with the IMF and World Bank.
Aurangzeb stated that Pakistan is among the countries significantly impacted by climate change, and following the IMF agreement approval, talks will commence on climate financing.
These discussions are set to take place during the annual meetings with the IMF and World Bank in October.
The finance minister expressed concern over Pakistan's rapidly growing population, describing it as a "population bomb" that has already exploded.
He stressed the need for effective plans to mitigate the effects of climate change and control population growth, emphasising the importance of collaboration with international organisations for climate finance.
He highlighted the collaborative efforts between the Ministry of Finance, the Ministry of Climate Change, the IMF, and the World Bank to develop effective strategies for climate financing.
Aurangzeb underscored the importance of improving the monitoring of climate change projects with the support of these organisations.
The finance minister also called for private sector involvement in improving the country's economy and developing climate change policies.
Aurangzeb pointed out the need for better economic conditions through budget and tax measures, energy sector reforms, and enhanced living standards to address the challenges posed by climate change.
As Pakistan prepares for the upcoming IMF and World Bank meetings, the government's focus remains on securing the IMF agreement and advancing climate finance discussions to address the pressing challenges of climate change and economic stability.
EXPRESS TRIBUNE
Finance Minister Mohammad Aurangzeb on Monday announced that the country is expected to secure the International Monetary Fund's (IMF) staff-level agreement approval by the end of August.
Speaking at an event in Islamabad, Aurangzeb emphasised the importance of this agreement for Pakistan's economic stability and highlighted plans for climate finance discussions with the IMF and World Bank.
Aurangzeb stated that Pakistan is among the countries significantly impacted by climate change, and following the IMF agreement approval, talks will commence on climate financing.
These discussions are set to take place during the annual meetings with the IMF and World Bank in October.
The finance minister expressed concern over Pakistan's rapidly growing population, describing it as a "population bomb" that has already exploded.
He stressed the need for effective plans to mitigate the effects of climate change and control population growth, emphasising the importance of collaboration with international organisations for climate finance.
He highlighted the collaborative efforts between the Ministry of Finance, the Ministry of Climate Change, the IMF, and the World Bank to develop effective strategies for climate financing.
Aurangzeb underscored the importance of improving the monitoring of climate change projects with the support of these organisations.
The finance minister also called for private sector involvement in improving the country's economy and developing climate change policies.
Aurangzeb pointed out the need for better economic conditions through budget and tax measures, energy sector reforms, and enhanced living standards to address the challenges posed by climate change.
As Pakistan prepares for the upcoming IMF and World Bank meetings, the government's focus remains on securing the IMF agreement and advancing climate finance discussions to address the pressing challenges of climate change and economic stability.
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IMF Executive Board meeting agenda issued, Pakistan not included
The final approval of Pakistan's much-anticipated $7 billion bailout package from the International Monetary Fund (IMF) remains uncertain, as the IMF Executive Board’s schedule until August 28 has been released.
Notably, Pakistan's name has yet to be included in the board's agenda, raising concerns about the timeline for the disbursement of the loan.
Despite the exclusion, sources indicate that the Executive Board has the discretion to add agenda items outside of the official schedule, leaving room for optimism. This development follows the staff-level agreement between Pakistan and the IMF, which was signed on July 12.
The finance minister has hinted at the possibility of the board meeting taking place at the end of the month, potentially offering relief to the country's struggling economy. Officials explain that typically, after a staff-level agreement is reached, the Executive Board meets within four to six weeks to finalize the agreement.
The new IMF loan program, set to span over 37 months, is expected to provide critical financial support to Pakistan, helping to stabilize the economy, boost foreign reserves, and address ongoing fiscal challenges.
However, until the Executive Board gives its formal approval, Pakistan's financial outlook remains in a state of flux.
In a statement issued by IMF’s Mission Chief to Pakistan Nathan Porter on the signing of the agreement, "The Pakistani authorities and the IMF team have reached a staff-level agreement on a comprehensive program endorsed by the federal and provincial governments, that could be supported by a 37-month Extended Fund Arrangement (EFF) in the amount equivalent to SDR 5,320 million (or about US$7 billion at current exchange rates)."
It further said that the agreement was subject to approval by the International Monetary Fund's Executive Board and timely confirmation of necessary financing assurances from Pakistan's development and bilateral partners.
According to the IMF statement, the program aims at capitalising on the hard-won macroeconomic stability achieved over the past year, by intensifying efforts to enhance public finances, curb inflation, rebuild external buffers, and eliminate economic distortions to promote private sector-led growth.
The authorities' policy objectives include sustainable public finances, through a gradual fiscal consolidation based on reforms to broaden the tax base and remove exemptions, while increasing resources for critical development and social spending. In this regard, the authorities plan to increase tax revenues through measures of 1.5% of GDP in FY25 and 3% of GDP over the program.
IMF Executive Board meeting agenda issued, Pakistan not included
Pakistan's $7 billion IMF bailout package awaits final approval, but the country's name has yet to be included on the IMF Executive Board's agenda for August 2024. With the agreement signed in July, officials remain optimistic that the board will meet by the end of the month.
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Pakistan 'making good progress' for IMF $7bn loan deal approval in September: FinMin
Finance Minister Muhammad Aurangzeb has said that the government hopes to get approval for a new $7 billion loan programme from the International Monetary Fund's (IMF) board in September, saying that its engagement with the Fund is progressing well.
"We are making good progress with the IMF for Board approval in September," the minister said on Wednesday in a text message to Reuters.
The federal minister's remarks come as the country is so far unable to sign a Letter of Intent (LoI) for making a formal request to the Washington-based lender’s executive board for considering approval of $7 billion under the Extended Fund Facility (EFF) programme.
A day earlier, The News report stated the country is yet to secure confirmation on an external financing gap of $3 to $5 billion, despite passage of five weeks after striking a staff-level agreement under a fresh EFF bailout package.
The finance czar and the State Bank of Pakistan (BSP) governor Jameel Ahmad are supposed to sign the LoI on behalf of the government and the commitment would be dispatched to the IMF’s executive board with a request for approving $7 billion under the EFF programme of 37 months.
It should be noted here that Pakistan and the IMF had struck a staff level agreement on the 37-month loan programme on July 12, 2024, with the country hoping that its request would be considered for approval by the IMF’s executive board in four to six weeks.
The IMF said the programme was subject to approval from its executive board and obtaining "timely confirmation of necessary financing assurances from Pakistan's development and bilateral partners".
Islamabad again faces external financing as major stumbling block in the way for securing fresh bailout package from the IMF.
Pakistan is in talks with Saudi Arabia, the United Arab Emirates (UAE) and China to meet gross financing needs under the IMF programme, Aurangzeb said in July following a trip to China to seek energy sector debt reprofiling.
Rollovers or disbursements on loans from Pakistan's long-time allies, in addition to financing from the IMF, have helped Pakistan meet its external financing needs in the past.
The global lender earlier this week issued calendar for executive board’s scheduled agenda items. However, the Fund has not included Pakistan into list of countries for which the IMF board would consider approval of loans till August 28, 2024.
The IMF did not immediately respond to a Reuters request for comment on Pakistan's external financing needs and the executive board's meeting on Pakistan's loan programme.
During an analyst briefing following the central bank's decision in July to cut rates by 100bps, the central bank chief said he expected rollovers of $16.3 billion in the fiscal year to June 2025 — more than half of Pakistan's $26.2 billion external financing requirement.
Pakistan 'making good progress' for IMF $7bn loan deal approval in September: FinMin
Finance Minister Muhammad Aurangzeb has said that the government hopes to get approval for a new $7 billion loan programme from the International Monetary Fund's board in September, saying that its...
www.thenews.com.pk
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Pakistan is not on the IMF’s August 28 agenda
Pakistan has yet to secure confirmation of a $3 billion to $5 billion external financing gap, five weeks after reaching a staff-level agreement on a new Extended Fund Facility (EFF) bailout package.
Thus, Pakistan, so far, is unable to sign a Letter of Intent (LoI) to make a formal request to the IMF’s executive board for the possible approval of $7 billion under the EFF program.
Finance Minister Muhammad Aurangzeb and the Governor of the State Bank of Pakistan (BSP) are expected to sign the LoI on behalf of the government and the pledge will be sent to the IMF Executive Board with a request for approval of $7 billion under the EFF program of 37 months. .
External financing has again emerged as a major obstacle on the way to securing a new bailout package from the IMF. The IMF has issued a calendar of the executive board’s scheduled agenda items, and Pakistan was not included in the list of countries for which the IMF board will consider loan approval until August 28, 2024.
This scribe contacted Aurangzeb to inquire about the signing of the LoI and the IMF Executive Board’s consideration of granting approval to Pakistan’s request for a $7 billion package. In his brief response, he said, “We are making good progress toward board approval in September.”
Pakistan and the IMF had reached a staff-level agreement on July 12, 2024, and it was hoped that Islamabad’s request would be considered for approval by the IMF’s executive board in four to six weeks.
When both sides had entered into the agreement at the staff level, the IMF statement clearly stated, “this agreement is subject to the approval of the IMF Executive Board and the timely confirmation of the necessary financial assurances by Pakistan’s development and bilateral partners.”
Pakistan will have to repay $26.2 billion in external debt during the current fiscal year 2024-25, of which there will be a rollover of $12.3 billion in deposits.
It was conveyed to the IMF that foreign deposits would be converted for a period of one year. It was the government’s wish to ensure conversion over a three-year period, but countries such as Saudi Arabia, China and the United Arab Emirates (UAE) committed to a one-year conversion.
Pakistan is not on the IMF's August 28 agenda – The Pakistan Daily
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Pakistan's loan from IMF not on schedule again till Sept 4
The Executive Board of the International Monetary Fund (IMF) has released its schedule of meetings up to September 4, with Pakistan's name absent from the list once again.
Despite this, the Finance Ministry remains optimistic about securing approval for the $7 billion bailout package from the IMF in September.
According to sources, the government is actively working to secure a rollover of $12 billion in debt from China, Saudi Arabia, and the United Arab Emirates (UAE).
Additionally, Pakistan has reportedly requested another $1.2 billion loan from Saudi Arabia to cover a $2 billion financing gap. Pakistan already holds $5 billion in cash deposits from Saudi Arabia, $4 billion from China, and $3 billion from the UAE.
Moreover, Pakistan faces an additional commercial debt burden of $4.5 billion, including obligations to China.
On August 23, Federal Minister for Finance Muhammad Aurangzeb had said that the IMF Executive Board would approve the new loan program in September. Speaking to media in Islamabad, he had mentioned that discussions were ongoing with the IMF every second day, and China, Saudi Arabia, and the United Arab Emirates had also given a positive response. He added that the friendly countries would take the international lender into confidence through executive directors.
The minister went on to say that Pakistan needed external financing of $2 billion for the current fiscal year and $3 billion during the next 37 months.
This is the third time that the IMF Executive Board has excluded Pakistan from its meeting schedule, when earlier it was expected that the global lender would approve the country's $7 billion bailout loan programme by August end.
According to sources, Pakistan's name has not been included in the latest schedule of the IMF Executive Board meeting, which has been released through August 30.
As per the last schedule issued on August 21, the IMF board would review applications from three countries, including Vietnam, between August 28 and 30. Pakistan's request for a new loan program was postponed until next month, further prolonging the country's wait for financial assistance.
Sources indicated that the main reason for the delay was the non-timely rollover of a $12 billion loan from friendly countries. The IMF had set stringent conditions, requiring Pakistan to secure assurances of external financing before the executive board meeting.
Pakistan's loan from IMF not on schedule again till Sept 4
Pakistan's name is absent from the IMF Board's schedule till September 4, but the Finance Ministry is hopeful for a $7 billion bailout approval in September. The government is also seeking a $12 billion debt rollover from China, Saudi Arabia, and UAE.
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IMF links bailout package to $12b debt rollover
The International Monetary Fund (IMF) has demanded of the Pakistan government to get $12 billion loan rolled over by next week to secure the bailout package. Besides, the fund has also asked the country to meet the revenue shortfall in the month of September.
According to finance ministry sources, the ministry held a virtual dialogue with the IMF but it could not seek an external financing approval deadline from the IMF Executive Board.
The sources disclosed the matter of revenue shortfall also came under discussion during the meeting. In addition, the finance ministry officials also briefed the fund about Pakistan's efforts for getting the debt rolled over from friendly countries.
The IMF has asked Pakistan to get the task done by next week.
The fund has also demanded that the revenue shortfall be addressed in September.
The fund further stated that if the revenue shortfall was not plugged then the fund will seek a plan from FBR on how it proposes to achieve the revenue target.
EXPRESS TRIBUNE
The International Monetary Fund (IMF) has demanded of the Pakistan government to get $12 billion loan rolled over by next week to secure the bailout package. Besides, the fund has also asked the country to meet the revenue shortfall in the month of September.
According to finance ministry sources, the ministry held a virtual dialogue with the IMF but it could not seek an external financing approval deadline from the IMF Executive Board.
The sources disclosed the matter of revenue shortfall also came under discussion during the meeting. In addition, the finance ministry officials also briefed the fund about Pakistan's efforts for getting the debt rolled over from friendly countries.
The IMF has asked Pakistan to get the task done by next week.
The fund has also demanded that the revenue shortfall be addressed in September.
The fund further stated that if the revenue shortfall was not plugged then the fund will seek a plan from FBR on how it proposes to achieve the revenue target.
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IMF pressure halts new EPZ plan
The government on Wednesday withdrew a proposal to establish a new Export Processing Zone (EPZ) in Balochistan, complying with a condition set by the International Monetary Fund (IMF), highlighting the global lender's growing influence over the country's economic decision-making.
The Ministry of Industry and Production had initially pushed for the creation of the EPZ to promote copper exports from Siah Diq, Balochistan.
However, the Ministry of Finance opposed the plan during a meeting of the Economic Coordination Committee (ECC), leading to its withdrawal.
The ECC meeting was chaired by Finance Minister Senator Muhammad Aurangzeb.
In the same meeting, the ECC approved an additional Rs1 billion in funds for hosting the heads of government from the Shanghai Cooperation Organisation (SCO) in Islamabad on October 15-16.
The Ministry of Foreign Affairs informed the ECC that the event, a significant diplomatic gathering, could not be held within its regular budget of Rs1.7 billion.
The total cost of the summit is estimated at Rs1.5 billion, and the Ministry of Finance had already provided Rs500 million.
The ECC allocated Rs300 million for accommodating foreign leaders, Rs200 million for transportation, and Rs100 million for stationery.
Rs200 million was earmarked for publicity, while a major portion, Rs400 million, will be paid to an event management company.
A proposal to designate the Siah Diq copper mine area as an EPZ was also brought before the ECC.
However, opposition from the Ministry of Finance, based on an IMF stipulation under the $7 billion Extended Fund Facility (EFF), forced the withdrawal of the plan.
The Express Tribune has reported that govt accepted the IMF's condition that Pakistan is prohibited from establishing any new special economic or export processing zones, and all existing incentives will expire by 2035, regardless of the operational status of projects.
This condition is a significant hurdle for the government, which had planned to establish an EPZ on the land of the closed Pakistan Steel Mills (PSM). Jamil Qureshi, Secretary of the Special Investment Facilitation Council (SIFC), had stated earlier on Wednesday that there were no restrictions on the creation of new EPZs, emphasising their importance in boosting exports.
However, hours after Qureshi's statement on X, formerly Twitter, the government withdrew the summary of the EPZ.
Government sources revealed that the IMF has mandated that no new Special Economic Zones (SEZ) or EPZs can be created at either the federal or provincial levels.
Khyber-Pakhtunkhwa has refused to accept this condition, according to reports.
The ECC also reviewed a summary from the Ministry of Energy regarding a change in the gas supply priority order.
It approved a proposal to amend the current gas allocation, placing gas usage for industrial processes as a top priority, alongside domestic and commercial sectors.
Industries using captive power were relegated to a lower priority, alongside the Compressed Natural Gas (CNG) sector, to encourage a shift toward the national power grid.
This measure would benefit industries using gas in their processes, elevating them to the highest priority category, according to the Ministry of Finance.
Previously, industries were using cheaper gas to generate in-house power for consumption and selling surplus power to the government.
However, under an IMF condition, the government is working to phase out gas supplies to captive power plants by increasing gas prices and placing them at the bottom of the gas supply chain.
Additionally, the ECC exempted the contract award for the Kalkatak-Chitral road project from international competitive bidding, granting it to South Korea, which is financing the project.
According to a finance ministry handout, the ECC reviewed a summary from the Ministry of Communications concerning the "Kalkatak-Chitral 48 km Road Project - Procurement of Civil Works."
It authorised the Ministry of Communications and the National Highway Authority to proceed with procurement under Public Procurement Rule-5, which allows the government to exempt projects from competitive bidding.
The ECC also reviewed a proposal for funds amounting to Rs238.42 million to clear arrears from wheat subsidy schemes dating back to 2015-16, as requested by the Ministry of National Food Security and Research.
Following the recommendations of the Senate Standing Committee on Finance and Revenue, the ECC directed the ministry to arrange the funds from its available budgetary resources to settle the long-pending claims.
Furthermore, the Ministry of National Food Security and Research sought a loan of Rs656 million for the Pakistan Central Cotton Committee (PCCC) to pay employee salaries and pensions.
After deliberation, the ECC recommended considering the entity for dissolution and directed that the case be submitted to the Cabinet Committee for Rightsizing of the federal government.
EXPRESS TRIBUNE
The government on Wednesday withdrew a proposal to establish a new Export Processing Zone (EPZ) in Balochistan, complying with a condition set by the International Monetary Fund (IMF), highlighting the global lender's growing influence over the country's economic decision-making.
The Ministry of Industry and Production had initially pushed for the creation of the EPZ to promote copper exports from Siah Diq, Balochistan.
However, the Ministry of Finance opposed the plan during a meeting of the Economic Coordination Committee (ECC), leading to its withdrawal.
The ECC meeting was chaired by Finance Minister Senator Muhammad Aurangzeb.
In the same meeting, the ECC approved an additional Rs1 billion in funds for hosting the heads of government from the Shanghai Cooperation Organisation (SCO) in Islamabad on October 15-16.
The Ministry of Foreign Affairs informed the ECC that the event, a significant diplomatic gathering, could not be held within its regular budget of Rs1.7 billion.
The total cost of the summit is estimated at Rs1.5 billion, and the Ministry of Finance had already provided Rs500 million.
The ECC allocated Rs300 million for accommodating foreign leaders, Rs200 million for transportation, and Rs100 million for stationery.
Rs200 million was earmarked for publicity, while a major portion, Rs400 million, will be paid to an event management company.
A proposal to designate the Siah Diq copper mine area as an EPZ was also brought before the ECC.
However, opposition from the Ministry of Finance, based on an IMF stipulation under the $7 billion Extended Fund Facility (EFF), forced the withdrawal of the plan.
The Express Tribune has reported that govt accepted the IMF's condition that Pakistan is prohibited from establishing any new special economic or export processing zones, and all existing incentives will expire by 2035, regardless of the operational status of projects.
This condition is a significant hurdle for the government, which had planned to establish an EPZ on the land of the closed Pakistan Steel Mills (PSM). Jamil Qureshi, Secretary of the Special Investment Facilitation Council (SIFC), had stated earlier on Wednesday that there were no restrictions on the creation of new EPZs, emphasising their importance in boosting exports.
However, hours after Qureshi's statement on X, formerly Twitter, the government withdrew the summary of the EPZ.
Government sources revealed that the IMF has mandated that no new Special Economic Zones (SEZ) or EPZs can be created at either the federal or provincial levels.
Khyber-Pakhtunkhwa has refused to accept this condition, according to reports.
The ECC also reviewed a summary from the Ministry of Energy regarding a change in the gas supply priority order.
It approved a proposal to amend the current gas allocation, placing gas usage for industrial processes as a top priority, alongside domestic and commercial sectors.
Industries using captive power were relegated to a lower priority, alongside the Compressed Natural Gas (CNG) sector, to encourage a shift toward the national power grid.
This measure would benefit industries using gas in their processes, elevating them to the highest priority category, according to the Ministry of Finance.
Previously, industries were using cheaper gas to generate in-house power for consumption and selling surplus power to the government.
However, under an IMF condition, the government is working to phase out gas supplies to captive power plants by increasing gas prices and placing them at the bottom of the gas supply chain.
Additionally, the ECC exempted the contract award for the Kalkatak-Chitral road project from international competitive bidding, granting it to South Korea, which is financing the project.
According to a finance ministry handout, the ECC reviewed a summary from the Ministry of Communications concerning the "Kalkatak-Chitral 48 km Road Project - Procurement of Civil Works."
It authorised the Ministry of Communications and the National Highway Authority to proceed with procurement under Public Procurement Rule-5, which allows the government to exempt projects from competitive bidding.
The ECC also reviewed a proposal for funds amounting to Rs238.42 million to clear arrears from wheat subsidy schemes dating back to 2015-16, as requested by the Ministry of National Food Security and Research.
Following the recommendations of the Senate Standing Committee on Finance and Revenue, the ECC directed the ministry to arrange the funds from its available budgetary resources to settle the long-pending claims.
Furthermore, the Ministry of National Food Security and Research sought a loan of Rs656 million for the Pakistan Central Cotton Committee (PCCC) to pay employee salaries and pensions.
After deliberation, the ECC recommended considering the entity for dissolution and directed that the case be submitted to the Cabinet Committee for Rightsizing of the federal government.
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IMF likely to approve loan program for Pakistan
The International Monetary Fund (IMF) is expected to approve the loan program for Pakistan during its Executive Board meeting scheduled later this month, ARY News reported on Thursday.
IMF’s Director of Communication, Julie Kozek, confirmed that an Executive Board meeting scheduled to take place on September 25 in a press briefing, adding that negotiations for a new $7 billion loan program were finalized back in July.
On the other hand, the Finance Minister of Pakistan – Muhammad Aurangzeb – announced that all matters with the IMF have been settled amicably, stating, “Alhamdulillah, the Prime Minister is grateful to the IMF negotiation team and related institutions.”
He highlighted that the economy is now transitioning towards growth following stabilization.
According to the minister, finalization of the agreement will occur during the IMF board meeting later this month.
He added that a reduction in the policy rate will boost investment and business activities, creating employment opportunities.
arynews.tv
The International Monetary Fund (IMF) is expected to approve the loan program for Pakistan during its Executive Board meeting scheduled later this month, ARY News reported on Thursday.
IMF’s Director of Communication, Julie Kozek, confirmed that an Executive Board meeting scheduled to take place on September 25 in a press briefing, adding that negotiations for a new $7 billion loan program were finalized back in July.
On the other hand, the Finance Minister of Pakistan – Muhammad Aurangzeb – announced that all matters with the IMF have been settled amicably, stating, “Alhamdulillah, the Prime Minister is grateful to the IMF negotiation team and related institutions.”
He highlighted that the economy is now transitioning towards growth following stabilization.
According to the minister, finalization of the agreement will occur during the IMF board meeting later this month.
He added that a reduction in the policy rate will boost investment and business activities, creating employment opportunities.
IMF likely to approve loan program for Pakistan
WASHINGTON: The International Monetary Fund (IMF) is expected to approve the loan program for Pakistan during its Executive Board meeting scheduled later
arynews.tv
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Pakistanis should revolt against this organisation which is blatantly interfering as a proxy for Zionist Establishment, all nonsense podcasts against Israel and no action against the true Zionist system.
Absolute dullards.
Absolute dullards.
IMF likely to approve loan program for Pakistan
The International Monetary Fund (IMF) is expected to approve the loan program for Pakistan during its Executive Board meeting scheduled later this month, ARY News reported on Thursday.
IMF’s Director of Communication, Julie Kozek, confirmed that an Executive Board meeting scheduled to take place on September 25 in a press briefing, adding that negotiations for a new $7 billion loan program were finalized back in July.
On the other hand, the Finance Minister of Pakistan – Muhammad Aurangzeb – announced that all matters with the IMF have been settled amicably, stating, “Alhamdulillah, the Prime Minister is grateful to the IMF negotiation team and related institutions.”
He highlighted that the economy is now transitioning towards growth following stabilization.
According to the minister, finalization of the agreement will occur during the IMF board meeting later this month.
He added that a reduction in the policy rate will boost investment and business activities, creating employment opportunities.
IMF likely to approve loan program for Pakistan
WASHINGTON: The International Monetary Fund (IMF) is expected to approve the loan program for Pakistan during its Executive Board meeting scheduled later
Finance Minister going "Alhamdulillah, the Prime Minister is grateful to the IMF negotiation team and bla bla" is unexpected of a proud nation like Pakistan. He should show some dignity and should stop seeing loans as an achievement. It's been too long, the cycle needs to stop asap.
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Pakistan on IMF Executive Board’s agenda
The International Monetary Fund (IMF) included Pakistan on the agenda of its Executive Board meeting scheduled for September 25, 2024.
The Executive Board will consider the final approval under the US$7 billion stand-by arrangement (SBA).
The sources said that if the IMF Executive Board expresses satisfaction with Pakistan’s progress, it would pave the way for the release of installments.
arynews.tv
The International Monetary Fund (IMF) included Pakistan on the agenda of its Executive Board meeting scheduled for September 25, 2024.
The Executive Board will consider the final approval under the US$7 billion stand-by arrangement (SBA).
The sources said that if the IMF Executive Board expresses satisfaction with Pakistan’s progress, it would pave the way for the release of installments.
Pakistan on IMF Executive Board’s agenda
The International Monetary Fund (IMF) included Pakistan on the agenda of its Executive Board meeting scheduled for September 25, 2024. The Executive Board
arynews.tv
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IMF board approves $7bn loan programme for Pakistan
The International Monetary Fund’s (IMF) Executive Board has greenlighted a 37-month $7 billion Extended Fund Facility (EFF) for Pakistan, with the incumbent government hoping that it would be the country’s last.
The breakthrough was achieved in the aftermath of getting confirmation of $12 billion bilateral loans from Saudi Arabia, China and the UAE.
According to insiders, Pakistan owes $5 billion to Saudi Arabia in the form of cash deposits. It must be noted that Pakistan also holds $4 billion in deposits from China and $3 billion from the UAE.
Pakistan was required to secure external financing of $2 billion from bilateral and commercial lenders as a pre-requisite for the IMF board’s approval.
Later, the global lender identified external financing gap of $2 to $2.5 billion and confirmation was secured from the kingdom in the shape of Saudi oil facility as well as ITFC facility of $400 million from IsDB and remaining from Standard Chartered Bank and other Middle East-based commercial banks, as per The News report.
Islamabad has relied heavily on IMF programmes for years, at times nearing the brink of sovereign default and having to turn to countries such as the United Arab Emirates and Saudi Arabia to provide it with financing to meet external financing targets set by the IMF.
IMF board approves $7bn loan programme for Pakistan
WASHINGTON: The International Monetary Fund’s Executive Board has greenlighted a 37-month $7 billion Extended Fund Facility for Pakistan, with the incumbent government hoping that it would...
www.thenews.com.pk
Are people really that stupid here. The people in power do not represent the common people in Pakistan, they are crooks and thieves. These loans are an extension of their bank account, its their perceived right. They will never feel humiliation, why would they? For them this world is heaven, then when on last legs fly to mecca and get green card priority upgrade and absolve all wordly indiscretions. The rest i.e suffering population can sort it out for themselves. Ordinary Pakistanis hated the very first loan let alone subsequent ones.
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IMF says unaware of Pakistan securing commercial financing at 11% interest rate
The International Monetary Fund (IMF) has clarified that it is unaware of Pakistan securing any commercial financing at an 11% interest rate.
In a statement issued on Thursday, an IMF spokesperson stated that the global lender has not requested Pakistan to pursue such high-interest commercial loans.
The spokesperson further noted that no such financing is necessary to meet the program assurances under Pakistan’s current agreement with the IMF.
Prior to the Executive Board of the International Monetary Fund (IMF) approving the critical $7 billion loan package for Pakistan, it had been reported that the country borrowed from international commercial banks at an interest rate of 11% -- one of the highest rates in the country’s history.
This new bailout program, spanning 37 months, marks Pakistan's 24th IMF assistance package. With its approval, Pakistan will also be eligible to receive funds from other international organizations and countries.
The approval of the loan follows a staff-level agreement reached between Pakistan and the IMF on July 12. Pakistani officials have confirmed that all preconditions for the loan, including securing $2 billion in additional financing and consolidating $12.7 billion in debt, have been fulfilled.
China, Saudi Arabia, the UAE, and Kuwait have also provided crucial support by deferring Pakistan’s loan payments for one year.
On Wednesday night, the IMF Executive Board approved a $7 billion loan for Pakistan under the Expanded Fund Facility (EFF), and immediately released nearly $1 billion to help Pakistan address its economic challenges and restore macroeconomic stability.
In a statement announcing the new loan program, the IMF noted that Pakistan's economic growth rate has reached a modest 2.4% in the last fiscal year, and inflation fallen significantly to single digits.
This improvement was largely driven by activities in the agricultural sector and the implementation of adequate fiscal and monetary policies, which helped keep the country’s current account deficit under control. This allowed the foreign exchange reserves to improve again, while the decline in inflation reflects an improvement in the internal and external conditions.
IMF says unaware of Pakistan securing commercial financing at 11% interest rate
The IMF clarified that it is unaware of Pakistan securing commercial financing at an 11% interest rate, stating that no such high-interest loans are necessary for the program's assurances.
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Not sure whether it's time to celebrate or mourn, 76 years and Pakistan economy still struggling to sustain
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IMF’s $7 billion bailout sends Pakistan stocks to life-time high
Pakistan’s benchmark share index hit a life-time high in opening trade on Thursday, hours after the International Monetary Fund’s board approved a long-awaited $7 billion bailout deal for the struggling economy.
The IMF said the new program will require “sound policies and reforms” to strengthen macroeconomic stability and address structural challenges alongside “continued strong financial support from Pakistan’s development and bilateral partners.”
An immediate disbursement of about $1 billion will take place, an IMF statement said.
Pakistan’s stock benchmark index rose in early trade to a record high of 82,905.73 points, before reversing those gains later in the day to close 0.7 percent down at 81,657.
“We will need to take difficult decisions if we want to make it our last program with the IMF,” Pakistan’s junior finance minister, Ali Pervaiz Malik, told local Geo News TV on Thursday.
Prime Minister Shehbaz Sharif thanked the IMF managing director Kristalina Georgieva and said the country would continue to implement the tough economic reform agenda, he told reporters in New York on the sidelines of United Nations general assembly on Wednesday.
Georgieva congratulated Pakistan for moving forward with “home-defined” reforms.
“The economy is on the sound path,” she told reporters after the board meeting. “Growth is up and inflation is down,” she said.
Islamabad had been working on implementing conditions, which Sharif had previously called “strict” to secure the 37-month loan program agreed in July. One condition was to secure additional external financing, which the country was struggling to do.
Local media reported that Islamabad recently signed its most expensive commercial loan ever for $600 million at 11 percent interest as a last-ditch bid to cover the financing gap and secure board approval.
However, an IMF spokesperson said on Friday that the lender was unaware of a loan at this rate and that it was not necessary for the purposes of the program’s financing assurances.
REFORMS AND RISKS
The IMF said in its statement that Pakistan had taken key steps to restore economic stability with consistent policy implementation under the 2023-24 standby arrangement.
It added that growth had rebounded to 2.4 percent and inflation has receded significantly, falling to single digits, amid appropriately tight fiscal and monetary policies.
A contained current account and calm foreign exchange market conditions have allowed the rebuilding of reserve buffers, and the central bank of Pakistan has been able to cut the policy rate by a total of 450 bps since June, the statement said.
Despite this progress, it said, Pakistan’s vulnerabilities and structural challenges remain formidable, adding that the tax base remains too narrow.
“Without a concerted adjustment and reform effort, Pakistan risks falling further behind its peers,” it warned.
Pakistan has been struggling with boom-and-bust economic cycles for decades, leading to more than 20 IMF bailouts since 1958.
The South Asian country is the IMF’s fifth-largest debtor, owing the Fund $6.28 billion as of July 11, according to the lender’s data.
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IMF bailout package conditions revealed
Following the International Monetary Fund (IMF) Executive Board’s approval of a $7 billion Extended Fund Facility (EFF) for Pakistan, and the immediate release of approximately $1.1 billion, the stringent conditions attached to the loan program have emerged.
According to sources in the Ministry of Finance, the IMF has stipulated that Pakistan will revise the NFC (National Finance Commission) Award formula. The IMF will monitor provincial government expenditures.
Conditions include ongoing negotiations between the federal and provincial governments on a National Finance Pact; Pakistan will not provide energy subsidies exceeding 1% of GDP; Pakistan will not release supplementary grants during the IMF program.
Sources also indicate that conditions include bringing the agricultural sector into the tax net; bringing the property and retail sectors into the tax net; implementing reforms to reduce electricity prices; the government will introduce a comprehensive package to reduce electricity prices; and a review of power purchase agreements in the energy sector.
The conditions state that future electricity price relief will not be provided in the style of the Punjab government; subsidized food prices will not be set; and the federal government’s structure will be downsized.
Following the International Monetary Fund (IMF) Executive Board’s approval of a $7 billion Extended Fund Facility (EFF) for Pakistan, and the immediate release of approximately $1.1 billion, the stringent conditions attached to the loan program have emerged.
According to sources in the Ministry of Finance, the IMF has stipulated that Pakistan will revise the NFC (National Finance Commission) Award formula. The IMF will monitor provincial government expenditures.
Conditions include ongoing negotiations between the federal and provincial governments on a National Finance Pact; Pakistan will not provide energy subsidies exceeding 1% of GDP; Pakistan will not release supplementary grants during the IMF program.
Sources also indicate that conditions include bringing the agricultural sector into the tax net; bringing the property and retail sectors into the tax net; implementing reforms to reduce electricity prices; the government will introduce a comprehensive package to reduce electricity prices; and a review of power purchase agreements in the energy sector.
The conditions state that future electricity price relief will not be provided in the style of the Punjab government; subsidized food prices will not be set; and the federal government’s structure will be downsized.
IMF bailout package conditions revealed
conditions include bringing the agricultural, property and retail sectors into the tax net
english.aaj.tv
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Pakistan receives first tranche of $1.03 billion from IMF under EFF
The State Bank of Pakistan (SBP) has received the first tranche of Special Drawing Rights (SDR) 760 million, equivalent to $1.03 billion, from the International Monetary Fund (IMF) under the 37-month Extended Fund Facility.
This disbursement follows the IMF Executive Board’s approval of a $7 billion programme aimed at stabilising Pakistan’s economy. The SBP confirmed that these inflows will be reflected in its liquid reserves, with an official update expected on Thursday, October 3, 2024.
The IMF package is seen as crucial in addressing Pakistan’s economic challenges, including balance of payments pressures and dwindling foreign reserves.
The international lender on Wednesday approved a $7 billion new bailout package after Pakistan promised to overhaul its agriculture income tax, transfer some fiscal responsibilities to the provinces and agreed to limit subsidies.
The Prime Minister's Office said that the Executive Board of the IMF had approved the 37-month Extended Fund Facility totaling $7 billion. It also authorised immediate release of the first loan tranche of less than $1.1 billion. It is the 25th IMF programme that Pakistan has obtained since 1958 and 6th EFF.
Pakistan will pay around 5% interest rate on the IMF loan, according to the Ministry of Finance statement given to the Senate Standing Committee on Economic Affairs.
The IMF board has approved the programme without addressing one of the root causes of taking the loans - the need for restructuring of the external and domestic debt that consumed 81% of Pakistan's tax revenues in the last fiscal year.
Prime Minister Shehbaz Sharif on Wednesday again vowed that this will be Pakistan's last IMF programme – a similar statement that he had also given after the approval of the 24th IMF programme in 2023.
Sharif gave credit for the new IMF bailout package to Deputy Prime Minister Ishaq Dar, Chief of the Army Staff General Asim Munir and the finance team. He particularly thanked the Punjab Chief Minister Maryam Nawaz, Sindh's Murad Ali Shah and Balochistan Chief Minister Sarfraz Bugti by name but did not name K-P Chief Minister Ali Amin Gandapur.
Without the cooperation of all the four provinces, including K-P, the federal government cannot complete the 25th programme of the nation's history. The PM's statement suggests that he is giving preference to politics over national unity, which is needed for completing the IMF programme.
Pakistan receives first tranche of $1.03 billion from IMF under EFF | The Express Tribune
These inflows will be reflected in SBP’s liquid reserves, with an official update expected on Thursday, October 3
tribune.com.pk
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