IMF deal by week's end, hopes Naveed Qamar

Federal Minister for Commerce Syed Naveed Qamar has expressed hope that the International Monetary Fund (IMF) would announce its staff-level agreement (SLA) with Pakistan on the Extended Fund Facility (EFF) by the end of this week. 

“Pakistan has taken all the measures needed to unfreeze a $6.5 billion credit line and expects to clinch the deal any day now, ” he said in an interview with US broadcaster Bloomberg.

Minister of State for Finance Dr Aisha Ghaus Pasha, while speaking at the National Assembly earlier this week, had stated that Pakistan and the global lender were close to striking an SLA. However, she had said that Pakistan was required to undertake basic structural reforms, whether under the IMF programme or without it.

After a formal announcement by the Fund, Pakistan would get a $1.2 billion tranche under the EFF.

Qamar said that the IMF agreement would give investors and creditors the confidence that “Pakistan’s economy is now stabilising and [the country] has taken all the right steps." So in that sense, their money would remain protected, he added.

The minister said, “The IMF programme is the beginning, not the culmination, of all other monies flowing in."

"A pickup in imports once the nation boosts its reserves will also benefit exports," he added.

Pakistan is desperate to unlock the next tranche worth $1.1 billion loan facility with the IMF but is struggling to meet tough conditions set by the global financier.

The IMF is demanding that Pakistan boosts its pitifully low tax base, end exemptions for the export sector, and raise artificially low energy prices that are meant to help poor families.

The nation is in dire need of funds as it battles a wrenching economic crisis as the State Bank of Pakistan (SBP)-held foreign exchange reserves barely cover one month of imports.

Pakistan authorities have taken steps including increasing taxes, cutting subsidies and devaluing its currency to meet IMF conditions, Bloomberg reported.

It is pertinent to mention that the Parliament approved on Monday a supplementary finance bill that increases sales tax from 17% to 25% on imports ranging from cars and household appliances to chocolates and cosmetics.

People will also have to pay more for business-class air travel, wedding halls, mobile phones, and sunglasses.

A general sales tax was raised from 17% to 18% — increasing the burden on the already inflation-stricken people.