Pakistan signs off $3.5Bn loan with IMF
Pakistan has signed an unrealistic deal with the International Monetary Fund (IMF) in return for a $3.5 billion loan, which includes further electricity and gas price hikes, a mini-budget and a reduction of development expenditure by 534 billion rupees required emergency response.
The IMF on Friday released the combined report of the 7th and 8th bailout reviews, which includes a memorandum on economic and fiscal policies – a document packed with commitments made by Finance Minister Miftah Ismail on behalf of the government of Pakistan.
The document was needed to relaunch and extend the program until June 2023 to disburse a total of $3.5 billion in IMF loans from August 2022 to June 2023.
The plan seems to be unrealistic as illustrated by the fact that Pakistan promised the global lender it would hike petrol prices by up to 235% by the end of August – a deadline it has already missed.
The plan also envisages closing public sector commercial bank accounts by the end of December and transferring cash to the central bank. The endowment agreement between the Pak and the IMF is expected to be modified after the floods, although the IMF is unlikely to relax in areas where there is no direct impact on the flood-affected population. floods.
Pakistan has assured the IMF that if revenue collection slows or current spending exceeds targets, the government will embark on a contingency plan that will include both the introduction of new taxes and cuts in development spending by federal and provincial governments to report.
Pakistan signs off $3.5Bn loan with IMF
Pakistan has assured the IMF that it is “intensifying reform efforts in the gas sector. The government has assured the IMF that in principle; the energy subsidies will be limited to Rs 570 billion, of which PR 225 billion will be for the tariff differential subsidy resulting from the adjustment process of the electricity tariff.
