ISLAMABAD: Pakistan has received the letter of intent (the document outlining the general plans of an agreement) from the International Monetary Fund, sources in the Finance Division told Aaj News on Friday.

The document is key to Pakistan getting its loan, they said. Now Pakistan needs to sign off on it and dispatch to the global lender.

The IMF executive board would meet at the end of August when a report of the measures taken by Pakistan would be presented. The board is expected to approve the release of more than $1 billion of the tranche.

Sources said that the government has completed most of the prior conditions, including raising electricity prices and taxes.

The global lender’s representative to Pakistan, Esther Perez, told Aaj News earlier this month that Pakistan has met the last requirement of the IMF for the combined seventh and eighth review of the $6 billion loan, with an increase in its petroleum development levy on July 31.

The board meeting was tentatively planned for late August once adequate financing assurances are confirmed, she had added.

Mini-budget ‘in the offing’

The government has started working on bringing the mini-budget in order to meet the IMF’s prior conditions. It was expected to introduce further taxes on fertilizers, sugar, tobacco, and textile sectors.

Work on adding Rs40 billion of additional taxes under the mini-budget has been started, sources in the Federal Board of Revenue said. Such decisions could be taken through the passage of the outlay and ordinance in Parliament before the IMF’s board meeting.

They added that such measures were taken after the government withdrew the fixed tax regime on traders for this year.

The federal government on July 4 decided to withdraw a fixed tax regime on electricity bills for one year after three days of talks with the traders’ community that has been in protest against the levy since July 1.

“The decision was taken as per the demands of all traders’ community, Prime Minister Shehbaz Sharif and PML-N leaders’ instructions,” finance czar Miftah Ismail had said after meeting with them in Islamabad. He was accompanied by Power Minister Khurram Dastgir.

Economic experts have described the government measures as “unsuccessful”.

FBR officials said that swift actions would be taken after a briefing on the budget and the IMF loan in the PM Office.

What does Pakistan need for economic stability?

Pakistan’s economic stability was linked to political certainty, macroeconomist Sajid Amin Javed said as the country was expected to welcome another International Monetary Fund bailout package to support its ailing economy.

“The political leadership should give a clear message to the IMF that they will not withdraw from the IMF programme,” Javed told Aaj News. “The previous government decision to increase the fuel prices in February led to distrust, which impacted Pakistan’s credibility to complete the global lender’s programme.”

Aaj News had approached Javed, who is a research fellow and founding head of Policy Solutions Lab at the Sustainable Development Policy Institute Pakistan, to have comments on the joint statement issued by the State Bank of Pakistan and the finance ministry on the prevailing economic situation.

The Aaj Digital Desk in Karachi also contributed to the story.