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ISLAMABAD, Aug. 13 (PTI) The International Monetary Fund (IMF) convened its Executive Board meeting on Aug. 29 to approve a rescue package for cash-starved Pakistan by the end of the month, which includes payments of about $1.18 billion, There were media reports on Saturday.
The move, which follows the completion of $4 billion in bilateral financing between the four friendly countries, will pave the way for immediate payments, expected to go into Pakistani accounts by the end of business hours on August 31.
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Finance Minister Mifta Ismail told Dawn that earlier on Friday, lenders received a Letter of Intent (LOI) for a letter of intent (LOI) under the Employee Level Agreement (SLA) and Memorandum of Economic and Fiscal Policy (MEFP) signed last month ) to resume the program.
“We are going through a letter of intent, which will be signed and sent [it] Get back to the IMF as soon as possible and look forward to approval at the (executive) board meeting later this month,” he said.
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The executive committee will meet on August 29 to consider the Pakistan case to approve the completion of the seventh and eighth review of the Extended Fund Facility (EFF), sources said, in addition to a $1 billion increase in the size of the program , reaching $700 million and extending its term until August 2023.
They also said the board meeting was held after Saudi Arabia, the United Arab Emirates, Qatar and China confirmed to the International Monetary Fund that they had finalized a $4 billion bilateral financing arrangement for Pakistan, the final piece of the bailout package. All previous actions agreed under the SLA.
The approval of the IMF board is expected to reverse the continued depletion of foreign exchange reserves, strengthen the Pakistani rupee and support the balance of payments.
With the July 31 increase in the oil development tax on petroleum products, the IMF has publicly confirmed that Pakistan has completed all previous actions to resume its program, but has linked its Executive Board’s decision to approve the disbursement of $1.18 billion in funding from $4 billion in additional inflows from four friendly countries.
The finance minister earlier claimed to have brought in between $8.5 billion and $10 billion from friendly countries, compared with an IMF-estimated shortfall of $4 billion, while blaming the country’s political turmoil on sharp currency slumps. Devaluation and a bullish stock market.
The International Monetary Fund has announced on July 13 a long-awaited staff-level agreement with Pakistan, extending the deadline by nine months and increasing the size of the rescue package by $1 billion to $7 billion, including about $1.18 billion in advance.
However, the approval by the IMF’s executive committee is tied to a series of previous actions the government has fulfilled over the past two weeks.
On top of that, the IMF also asked the authorities to “stand ready to take any additional measures necessary to achieve program objectives as uncertainty increases in the global economy and financial markets”.
The government has since waived taxes on small traders and decided to impose additional taxes of more than 40 billion rupees to cover an unseen supplementary grant needed to bail out state-run Pakistan National Oil Corporation, which has oil. The company has more than Rs 61,000 crore funds on hold. Governments, their entities or private companies are suffocated by non-payment by the public sector.
Likewise, the government has also pledged to ensure timely implementation of tariff adjustments already identified by the electricity regulator, as well as quarterly and monthly adjustments to rein in rising revolving debt, which as of June had increased by an estimated Rs 85,000 crore last year. Timetable for increasing electricity prices.
The government has since also revised the development tax on petroleum products and fixed the rate at Rs 20 per litre for petrol and Rs 10 per litre for high-speed diesel, light diesel and kerosene – the last item under the pledge previous action.
39-month Extended Fund Facility (EFF) initially valued at $6 billion – reached in 2019 for countries facing significant balance of payments imbalances due to structural impediments or sluggish growth and already weak balance-of-payments positions — due to end in September This year, due to repeated failures of the program, only three payments of about $3 billion have been made so far, according to Dawn.
Since Imran Khan stepped down in April, Pakistan’s currency has plunged to an all-time low of 240 amid uncertainty over IMF bailouts.
Earlier this month, New York-based ratings agency Standard & Poor’s Global revised Pakistan’s long-term rating to “negative” from “stable” amid spiraling inflation and tightening global financial conditions.
(This is an unedited and auto-generated story from the Syndicated News feed, the body of the content may not have been modified or edited by LatestLY staff)
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