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Pakistan receives loan revival document from IMF

Global lender combines seventh, eighth tranches worth $900m and $1b
Khudar bana hai toh sab ko mil kar tax daina hoga: Miftah Ismail | 28 June 2022 | Aaj News

Pakistan on Tuesday received the draft of memorandum of economic and financial policies (MEFP) – a document which contains details regarding the revival of the loan programme – from the International Monetary Fund (IMF) for the combined seventh and eighth reviews of the bailout package as the country seeks to increase the size, from $6 billion to $8 billion, and duration of the 39-month loan facility.

“The IMF has combined the seventh and eighth tranches, worth around $900 million and $1 billion,” Finance Minister Miftah Ismail said while addressing the ‘Turnaround Pakistan Conference’ in Islamabad.

The finance czar had earlier shared the development in a tweet in the early morning.

IMF ‘demands’

Sources had told Aaj News about the IMF demands when the global lender and Pakistan confirmed the progress in bailout talks.

  • Expand the tax target from Rs7,005 billion to 7,450 billion
  • Customs collection to increase from Rs950 billion to Rs1,005 billion
  • Rs5 per litre petroleum levy on POL products every month, amounting to a total of Rs50
  • Sales tax on petroleum products be levied at the rate of 11% from July 1
  • Increasing the GST collection target from Rs3,008 billion to 3,300 billion
  • Jack up income tax collection target by Rs55 billion
  • Budget deficit to stand at Rs3,900 billion

Miftah added that PM Shehbaz Sharif had welcomed the development with a message to become self-reliant.

“Pakistan is out of danger now. There are no chances of default. We have to walk on a path and be disciplined and we will be out of the difficult situation,” he said.

In order to meet the IMF conditions, Pakistan first withdrew the fuel subsidy, which was announced by former prime minister Imran Khan. The petrol price now stands at around 234 per litre and sources said that it would further go up as part of the IMF demands.

The coalition government on June 11 unveiled an Rs9.5 trillion budget for 2022-23, aimed at tight fiscal consolidation in a bid to revive the loan programme. But, the IMF’s apparent “unhappiness” prompted the government to introduce a “super tax” and expand the tax net.

“Pakistanis, especially rich people have to make their input in making the country self-reliant,” Miftah said.

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Miftah Ismail