IMF Money to arrive in
Pakistan by August-end: Report
The
development follows the completion of the $4 billion in bilateral financing
from four friendly nations, including China and Saudi Arabia, and would pave
the way for immediate disbursement, expected to be in Pakistan’s account before
the end of working hours on August 31.
“We are going through the LOI, would sign and send [it] back to
the International Monetary Fund (IMF) anytime soon and look forward to
(executive) board meeting later this month for approval,” he said.
Sources said
the executive board would meet on August 29 to take up Pakistan’s case for
approval of the completion of the seventh and eighth reviews of the Extended
Fund Facility (EFF), besides a $1 billion increase in the size of the programme to $7 billion and the extension of its tenure to
August 2023.
They also said the board meeting was convened after
Saudi Arabia, the United Arab Emirates, Qatar and China confirmed to the IMF
that they had completed arrangements for $4 billion in bilateral financing to
Pakistan, which was the last hitch to the bailout package after completion of
all the prior actions agreed under the SLA.
The IMF
board’s clearance was expected to reverse continuously
depleting foreign exchange reserves, strengthen the Pakistani rupee and support
the balance of payments.
With an increase in petroleum development levy on oil products
on July 31, the IMF had publically
confirmed that Pakistan had completed all the prior actions for the revival of
its programme but had linked the approval of
disbursement of $1.18 billion funds by its executive board to confirmation of
$4 billion additional inflows from the four friendly countries.
The Finance
Minister had earlier claimed to have lined up $8.5
billion-$10 billion inflows from friendly countries against a financing gap of
$4 billion estimated by the IMF, but at the same time blamed political turmoil
in the country for steep currency depreciation and a bullish stock market.
The IMF had
announced on July 13 a much-awaited staff-level agreement with Pakistan on a
nine-month extension in tenor and a $1 billion increase in the size of the
bailout package to $7 billion, including upfront disbursement of about $1.18
billion.
Its approval from the IMF
executive board was, however, linked to a series of
prior actions that the government fulfilled over the past two weeks.
On top of this, the IMF also
made it binding on the authorities to “stand ready to take any additional
measures necessary to meet programme objectives,
given the elevated uncertainty in the global economy and financial markets”.
Since
then, the government waived taxes on small traders and decided to impose over
Pakistani Rs 40 billion worthy of additional taxes to
make up for an unseen supplementary grant required to bailout the state-run
Pakistan State Oil whose more than Rs 610 billion is
stuck up with the government, its entities or private companies choked by
non-payments by the public sector.
Likewise, the government
also gave a commitment to ensure timely implementation of power tariff rebasing
as already determined by the power regulator along with quarterly and monthly
adjustments to rein in rising circular debt which the
Fund estimated to have increased by Rs 850 billion
last year ending June 30. The government has now notified a schedule for a
gradual power tariff increase.
The government
has since also revised the development levy on petroleum products and fixed at
the rate of Rs 20 on petrol and Rs
10 per litre on high-speed diesel, light diesel and
kerosene – the last prior action under the commitment.
The original $6 billion worth of 39-month Extended Fund Facility
(EFF) — agreed in 2019 provided to countries facing serious payment imbalances
because of structural impediments or slow growth and an inherently weak
balance-of-payments position — was to end in September this year, but only
three tranches of about $3 billion could so far be disbursed as the programme suffered repeated breakdowns, according to Dawn.
Since Imran
Khan's ouster in April, Pakistan's currency has plummeted to an all-time low of
240, amid uncertainty about IMF assistance.
Earlier this
month, New York-based rating agency S&P Global revised Pakistan's long-term
ratings from 'stable' to 'negative' given the spiralling
inflation and tighter global financial conditions.