All conditions for IMF staff-level agreement met: Ishaq Dar

ISLAMABAD: Federal Minister for Finance and Revenue Ishaq Dar said that Pakistan has fulfilled all necessary conditions of the International Monetary Fund (IMF) and “no hurdle is now left” in the signing of a staff-level agreement, ARY News reported on Saturday.  

Speaking on the National Assembly floor, the finance minister noted that the government has introduced a number of changes to its fiscal 2024 budget in a last-ditch effort to clinch a stalled rescue package with the international lender.

For the fiscal year starting next month, the federal government will raise a further Rs215 billion in new tax and cut Rs85 billion in spending, as well as a number of other measures to shrink fiscal deficit, he said.

The federal minister made it clear that this reduction would have no impact on the proposed development budget, the raise in salaries and pensions of the federal government employees.

Ishaq Dar said that for the past few months, the nation was questioning whether the IMF’s ninth review would be successful or not, adding that he wanted to take the people into confidence on the matter.

“Pakistan has met all prior conditions of the international lender for the staff-level agreement despite economic hardships,” said Ishaq Dar while wrapping up the budget debate.

He said Pakistan held talks with the IMF with complete sincerity and assured the House that once the things with the international lender were settled; all details would be made public by placing the agreement on the official website of the Ministry of Finance.

Resultantly, he said the proposed tax collection target of Federal Board of Revenue (FBR) had been increased from Rs9200 billion to Rs9415 billion, with the provincial share going up from Rs5276 billion to Rs5390 billion, the federal government total expenditure estimate from Rs14460 billion to Rs14480 billion and pension estimate from Rs761 billion to Rs801 billion.

Ishaq Dar said the finance bill will be passed in two to three days, adding the restrictions imposed by the State Bank of Pakistan (SBP) on businesses have been removed.

He said efforts will be made to increase the foreign exchange reserves of the country. Dar went on to say that Pakistan will pay foreign loans on time, adding the import of food, medicine, and export raw materials has been a priority.

Ishaq Dar further said that the super tax limit has been increased from Rs300 million to Rs500 million. The tax on profit has been fixed at 15%, the minister said, adding an additional tax of up to 50% has been levied on windfall profits.

The finance minister further said he petroleum development levy was then increased from Rs50 to Rs60 per liter, claiming that the limit of the levy will not cross Rs60.

Read More: Pakistan, IMF bailout agreement expected ‘soon’

The review came a day after Prime Minister (PM) Shehbaz Sharif met with IMF Managing Director Kristalina Georgieva on the sidelines of the Global Financing Summit in Paris.

During the meeting, the two exchanged views on the ongoing programs and cooperation between Pakistan and IMF. Recalling their recent telephone conversation on 27 May 2023, the premier apprised Ms. Georgieva of Pakistan’s economic outlook.

READ: SBP lifts all restrictions on imports to fulfil IMF condition

Shehbaz Sharif outlined the steps taken by the Government for economic growth and stability. He underscored that all prior actions for 9th Review under the Extended Fund Facility had been completed and the Government of Pakistan was fully committed to fulfilling its obligations as agreed with the IMF.

About a week remains before the IMF’s Extended Fund Facility agreed in 2019 expires on June 30. Under the $6.5 billion facility’s ninth review, negotiated earlier this year, Pakistan has been trying to secure $1.1 billion of funding stalled since November.