Pakistan has received MEFP draft from IMF: Ishaq Dar

ISLAMABAD: Federal Minister for Finance Ishaq Dar said Friday that Pakistan had received the Memorandum of Economic and Financial Policies (MEFP) draft from the International Monetary Fund (IMF), ARY News reported.

“Memorandum for Economic and Financial Policies (MEFP) draft has been received from the global lender at 9am,” said Dar while addressing a press conference hours after the IMF issued a statement on its talks with Pakistan related to the completion of the ninth review of a $7 billion loan programme.

In a statement, IMF Mission Chief Nathan Porter said that virtual talks continue between the two sides in the coming days to finalise the implementation of key priorities.

“Virtual discussions will continue between the two sides in the coming days to finalise the implementation details of the policies,” it added.

In a press conference, Dar said: “Pakistan is expected to receive $1.2 billion from IMF after the completion of ninth review of $7bn Extended Fund Facility (EFF).” He further said that Rs170 billion in new taxes would be imposed through a mini-budget.

The minister went on to say that the government and global lender officials would hold a virtual meeting in this regard on Monday.

The finance minister said that Petroleum Development Levy (PDL) on diesel will be hiked to Rs50/litre under the IMF target. “Govt will raise PDL on diesel by Rs5 in March and April respectively to meet IMF target,” he added.

Dar emphasised that reforms are need of the hour in Pakistan, adding that Prime Minister Shehbaz Sharif had assured the IMF that the government would implement them.

He further said that reforms in the power and gas sectors would be implemented with the approval of federal cabinet. “The government will stop circular debt in gas sector from increasing,” said Dar.

IMF statement

The International Monetary Fund (IMF) today issued an official statement following the conclusion of the 9th review talks on the stalled loan program.

IMF mission chief Nathan Porter, in a statement, said that the timely and decisive implementation of policy measures along with resolute financial support from official partners are critical for Pakistan to successfully regain macroeconomic stability and advance its sustainable development.

The statement, issued after the mission concluded its 10-day Pakistan visit, welcomed Prime Minister Shehbaz Sharif’s commitment to implement policies that are required to “safeguard macroeconomic stability”.

He also thanked the leadsfor the “constructive discussions”.

The IMF chief noted “considerable progress” was made during the talks with Pakistani officials on “policy measures to address domestic and external imbalances”.

The IMF mission chief said that the “virtual discussions” will continue between the two sides in the coming days to finalise the “implementation details” of the policies.

‘Tough conditions’

International Monetary Fund (IMF) has asked Pakistan to impose roughly Rs600-800 billion in additional taxes in the second round of talks to revive $7 billion Extended Fund Facility (EFF).

During the meeting, the Fund set tough conditions for additional measures that included imposing roughly Rs600-800 billion in additional taxes.

Sources told ARY News that Pakistan was willing to impose taxes to the tune of Rs200 billion through a ‘mini-budget’, while the Fund pressed Islamabad to foist over Rs600 billion additional taxes.

The lender also demanded the government increase tax collection to 1 percent of Gross Domestic Product (GDP). Sources claimed that the Fund demanded the government fix next fiscal year’s tax collection target at Rs8.3 billion.

Sources further claimed that the IMF also demanded to end phase-wise incentives of sales tax. It also demanded to increase sales tax on petrol from 11 percent to 17 percent, sources said, adding that Fund demanded to end Rs110 billion relief granted to textiles and other industries.