Tuesday June 25, 2024

IMF getting confirmation from Pakistan’s creditors

Some minor issues remain unresolved so far but the Pakistani authorities seem confident about the signing of the agreement this week

By Mehtab Haider
March 08, 2023
Photo: The News/File
Photo: The News/File

ISLAMABAD: The IMF is getting confirmation from multilateral and bilateral creditors on all avenues of external financing for moving towards the signing of the Staff Level Agreement (SLA).

Some other minor issues remain unresolved so far but the Pakistani authorities seem confident about the signing of the agreement this week.

“Without getting 200 per cent confirmation on external financing from all possible avenues, the SLA could not be struck. This has proved the most crucial issue, as all other tough measures have been implemented by Pakistani authorities. The agreement would be signed only after getting assurances from creditors,” official sources confirmed while talking to The News Tuesday night.

An independent economist reminded that Greece had to secure confirmation on its external financing needs from the European Union (EU) and other creditors in 2010 for signing the IMF agreement. Greece possessed a higher quota, so it got more resources from the IMF. In Pakistan’s case, there is a limited quota and Islamabad can only secure almost $3 billion from the IMF by the end of June 2023. “There are some minor issues that remain unresolved, as both sides are reviewing nine tables of Memorandum of Economic and Financial Policies (MEFP) and full implementation of each and every point will pave the way for the signing of SLA with Pakistan,” said the official.

Citing an example, an official said the government passed a mini-budget in order to fetch an additional Rs170 billion by the end of the current financial year. However, the government has not yet notified the imposition of an enhanced GST rate of 25 per cent on luxury imported items as well as on locally-manufactured vehicles.

The IMF has sought details from the Ministry of Finance in this regard and it was told that the government had moved a summary through the circulation to the federal cabinet for getting approval after which the Statutory Regulatory Order (SRO) would be issued.

When it would be done, the IMF would seek assurances in writing from Minister for Finance Ishaq Dar and the governor State Bank of Pakistan through a signed Letter of Intent (LoI) for dispatching this document to the IMF’s Executive Board for getting approval on completion of 9th Review and release of $1 billion tranche under the $6.5 billion Extended Fund Facility (EFF).