International Monetary Fund Archives

Pakistan asks the IMF to deploy a review mission the next week to restart the loan program.

KARACHI – Pakistan has requested in writing that the International Monetary Fund (IMF) dispatch a review delegation to the federal capital the next week.

The choice was made during a meeting of the economic team presided over for essentially a second day in a row by Prime Minister Shehbaz Sharif.

According to media sources, the government has decided to invite the IMF after coming to the conclusion that there is no other option but to immediately reactivate the IMF plan.

The IMF’s strict recommendations were approved by PM Shehbaz a day earlier in order to end the impasse and complete the upcoming ninth review, which is required to release the $1 billion tranche under the $7 billion Extended Fund Facility (EFF).

Additionally, it was stated that the economic team had completed a macroeconomic and fiscal framework with connected IMF requirements.

“No other choice”

The decision-makers are aware that, in order to avoid a full-blown balance of payment crisis, Islamabad is left with no choice but to break the impasse and restart the stalled IMF plan on a temporary basis.

The government aims to persuade the IMF to reduce the Petroleum Development Levy (PDL) objective for the current fiscal year from Rs850 billion to Rs550 billion in accordance with the revised macroeconomic and fiscal framework.

The FBR would continue to aim to collect Rs7,470 billion in taxes. A presidential ordinance will be published to introduce the mini-budget.

Pakistan requests action from Iran to stop the terrorists responsible for the cross-border attack.

Pakistan has requested that Iran look into the cross-border terrorist incident in the Balochistan province of Panjgur and prosecute those responsibly.

At her weekly news briefing in Islamabad on Thursday, Foreign Office (FO) Spokesperson Mumtaz Zahra Baloch stated that the terrorists utilized Iranian soil to strike a convoy of security forces patrolling along the Pakistan-Iran border. She stated that Pakistan pledges that its land won’t be used to launch cross-border strikes in Iran and that we expect Iran to do the same.

Baloch noted that there are open lines of communication and that Pakistan has voiced its worries about the strike to Iranian authorities.

On Wednesday, the Inter-Services Public Relations (ISPR) announced that a terrorist strike from “Iranian soil” claimed the lives of four security personnel.

A culture of harmony with all neighbors

In response to a query, the FO spokeswoman stated that Pakistan wishes for peaceful coexistence with all of its neighbors, including India, and that this includes resolving the Kashmir dispute through negotiation. However, she continued, India’s unrelenting animosity and regressive actions have poisoned the atmosphere and hampered efforts to achieve peace and cooperation.

She added that the reversal of India’s illegal and unilateral measures of August 5, 2019, in the illegally occupied Jammu and Kashmir is essential for the start of the discussion and that it is still India’s responsibility to provide favorable conditions for substantive negotiations. She added if the international community could urge India to take such action, Pakistan would appreciate it.

Visit of FM Bilawal to Uzbekistan

The FO spokesperson also announced that Bilawal Bhutto Zardari, the foreign minister, will go to Tashkent, Uzbekistan, on January 25 to attend the 26th meeting of the Economic Cooperation Organization’s Council of Ministers.

She stated that on the sidelines of the meeting, the foreign minister will speak on the subject and undertake private consultations with the participating ministries and other dignitaries.

To restart a delayed IMF program, PM Shehbaz Sharif is prepared for “difficult decisions.”

ISLAMABAD: According to Prime Minister Shehbaz Sharif on Wednesday vowed to enforce tough decisions to end the impasse with the International Monetary Fund (IMF).

The difficult choices include raising the prices for gas and electricity as well as announcing a minibudget for enacting additional taxing measures to raise Rs150-200 billion.

The premier presided over an online conference Wednesday evening for almost three hours and thirty minutes, according to official sources.

The State Minister for Petroleum Musadik Malik did not respond when questioned about the potential increase in the cost of gas and electricity.

However, in accordance with people familiar with the circumstances. It is anticipated that the cost of gasoline will rise from Rs650 to Rs1,100 per MMBTU.

The government intends to recoup between Rs800 and Rs850 billion through the new price increase from the enormous circular debt of Rs1,640 billion owed by SNGPL and SSGCL.

In the meantime, during the current fiscal year, the government is proposing increasing the energy rate from Rs4.50 per unit in the first phase to Rs3 per unit in the second.

The government had set a target for FBR tax collection of Rs7,470 billion, however, up till December, FBR fell short by Rs225 billion. By a margin of Rs82 billion for the end of December 2022, the collection fell short of the IMF’s target.

According to the FBR’s internal estimate, the tax collection system will experience a shortfall of Rs170 billion for the current fiscal year, resulting in a tax collection of Rs7,300 billion as opposed to the earlier anticipated target of Rs7,470 billion.

The government will need to take further measures that could generate Rs300–400 annually in order to make up for the FBR’s shortfall. It would be a painful process for the government to impose extra taxes and rate increases through a potential presidential ordinance.

A 1–3% flood levy on imports is what the Pakistan Muslim League Nawaz (PML-N) administration proposes to impose in order to raise Rs100 billion.

Second, the government is reportedly considering levying a 60–70% tax on the purported profits made by commercial banks from manipulating the currency rate. The banks calculated that in the first nine months of the year 2022, unusual earnings totaled about Rs100 billion.

There will undoubtedly be an increase in the Federal Excise Duty (FED) on cigarettes and sugary drinks. Additionally, it’s likely that POL products will be subject to GST. Ishaq Dar, the finance minister, vehemently opposed placing a 17% GST on POL items in the past, claiming that it would be extremely inflationary.

It is unclear how the government will react to the IMF’s request to permit the rupee to weaken versus the US dollar. Ishaq Dar, the finance minister, will never let a free fall in the exchange rate, but he will need to increase the inflow of dollars in the next weeks and months to alleviate the dollar liquidity crisis.