A media report said on Saturday that the International Monetary Fund (IMF) convened a meeting of its executive board on August 29 to approve a bailout package for cash-strapped Pakistan, with effect from the end of the current month. The first involves disbursements of about USD 1.18 billion. ,
The move follows the completion of USD 4 billion in bilateral financing from four friendly countries and will pave the way for immediate disbursements, expected to be on Pakistan’s account before the end of working hours on August 31.
Finance Minister Miftah Ismail told Dawn that a letter of intent (LoI) was received early Friday from the lender for the revival of the program under the Employee Level Agreement (SLA) and the Memorandum of Economic and Fiscal Policies (MEFP) signed last month.
“We are going through the LOI, will sign and send [it] Might be back at the IMF soon and looking forward to the (executive) board meeting later this month for approval,” he said.
Sources said the executive board will meet on August 29 to take up Pakistan’s matter for approval to complete the seventh and eighth review of the Extended Fund Facility (EFF). Arab and extension of its term till August 2023.
He also said that the board meeting was convened by Saudi Arabia, the United Arab Emirates, Qatar and China after the IMF confirmed that they have arranged for USD 4 billion in bilateral financing to Pakistan, after the completion of The bailout was the final hitch for the package. Of all prior actions agreed under the SLA.
The IMF board’s approval was expected to reverse steadily depleting forex reserves, strengthen the Pakistani rupee and support the balance of payments.
With the increase in petroleum development duty on oil products on 31 July, the IMF publicly confirmed that Pakistan had completed all prior actions for the revival of its programme, but was approved by its executive board for USD 1.18 billion. Approval for distribution of funds was added. Confirmation of additional flows of USD 4 billion from four friendly countries.
The Finance Minister had earlier claimed that USD 8.5 billion to USD 10 billion had been inflows from friendly countries against the funding gap of USD 4 billion estimated by the IMF, but at the same time the political upheaval in the country had been countered by the currency. attributed to depreciation and a bullish stock market.
The IMF had on July 13 announced a much-awaited staff-level agreement with Pakistan, seeking a nine-month extension and increasing the size of the bailout package by USD 1 billion to USD 7 billion, with a total of about 1.18 billion. Advance disbursement of USD was included. Arab.
Its approval from the IMF’s executive board, however, was linked to a series of prior actions taken by the government over the past two weeks.
On top of this, the IMF made it binding on officials “to be prepared to take any additional measures necessary to meet the objectives of the program, given the high uncertainty in the global economy and financial markets”.
Since then, the government has waived taxes on small traders and decided to levy an additional tax of over 40 billion rupees for an overlooked supplementary grant needed to bailout state-run Pakistan State Oil, from 610 billion rupees. Stuck with more. The government, its institutions or private companies have been stunned by the non-payment by the public sector.
Similarly, the government also made a commitment to ensure timely implementation of the electricity tariff rebasing already prescribed by the electricity regulator along with quarterly and monthly adjustments to rein in the mounting circular debt, which is estimated to last year. The fund ending June saw an increase of Rs 850 billion. 30. The government has now notified a program for gradual increase in electricity rates.
The government has since also revised the development duty on petroleum products to Rs 20 per liter on petrol and Rs 10 per liter on high-speed diesel, light diesel and kerosene – the last ex-action under the commitment.
The 39-month Extended Fund Facility (EFF) – originally worth USD 6 billion – agreed in 2019 for those facing severe payments imbalances due to structural constraints or slow growth and an inherently weak balance of payments position countries – was to expire in September. According to Dawn, this year, but only three tranches of about USD 3 billion could be disbursed as the program faced repeated breakdowns.
Since the ouster of Imran Khan in April, Pakistan’s currency has slumped to an all-time low of 240, amid uncertainty about IMF aid.
Earlier this month, New York-based rating agency S&P Global revised Pakistan’s long-term rating from ‘stable’ to ‘negative’ in view of rising inflation and tighter global financial conditions.
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