Wednesday October 04, 2023

Pakistan has received MEFP from IMF for combined 7th and 8th reviews: Miftah

The draft MEFP is a prerequisite for paving the way for moving towards striking a staff-level agreement

By Mehtab Haider & Web Desk
June 28, 2022
Finance Minister Miftah Ismail. — Geo News screengrab
Finance Minister Miftah Ismail. — Geo News screengrab

ISLAMABAD: Federal Minister for Finance Miftah Ismail Tuesday said that Pakistan has received the draft Memorandum of Economic and Financial Policies (MEFP) from the International Monetary Fund for the combined 7th and 8th reviews. 

The minister made the announcement on Twitter.

"Early this morning, the Government of Pakistan has received an MEFP from the IMF for combined 7th and 8th reviews," he tweeted.

The draft MEFP is a prerequisite for paving the way for moving towards striking a staff-level agreement.

Now that Pakistan has received this document, it will be analysed and scrutinised by the entire economic team for three days and then the finance minister and the governor State Bank of Pakistan (SBP) will sign it if they find no major problem in it.

The MEFP, can in a sense, be considered the crux of decisions negotiated between the two sides as it includes policy actions and structural benchmarks agreed between the two sides.

The staff-level agreement will then be presented before the IMF’s Executive Board next month for approval after which the tranche will be released.

In a major development last Thursday, both the sides evolved a broader agreement on the budget 2022-23 for revising upward the FBR target and slashing down the expenditures to achieve a revenue surplus in the next fiscal year.

On Friday, Miftah Ismail, in his budget winding-up speech, announced changes in the fiscal measures as per the agreement reached with the lender.

The government fulfilled the demands of the IMF and agreed to slap a tax on salary earners of Rs50,000 to Rs100,000. The government made all-out efforts to convince the IMF but failed to do so.

The expenditure target was revised downwards, so a revenue surplus of Rs152 billion would be achieved.

The FBR collection target has been revised upward from Rs7,004 billion to Rs7,470 billion. The petroleum levy was kept unchanged at Rs 750 billion and now the government has decided to charge Rs10 per litre on POL products with effect from July 1, 2022.

The government has also imposed a 10% Super Tax on large-scale industries in order to meet the revenue target.

‘Pakistan to get $1.9 billion from IMF’

Speaking at the Turnaround Pakistan Conference in Islamabad, Finance Minister Miftah Ismail said that Pakistan will get $1.9 billion in total after the conclusion of 7th and 8th reviews from the IMF - $900 million and $1 billion respectively.

MIftah Ismail said that when he informed PM Shahbaz Sharif about the MEFP draft received today, the premier replied that the goal is self-sufficiency.

He said that 1 million people have registered for the cheap petrol scheme so far.

"Pakistan could not afford a fifth deficit. We have to make difficult decisions to put the country on the path of development."

He said that he was proud of the nation that it understood the problems faced by the country.

He also urged the rich to contribute toward national development, adding "Pakistan is not out of danger of bankruptcy."