‘It’s on the right track’: Finance minister refutes report claiming postponement of IMF program

July 5, 2022

ISLAMABAD – Finance Minister Miftah Ismail on Monday refuted reports that the International Monetary Fund (IMF) loan program for Pakistan had been postponed, saying there was “no truth” to it.

The minister issued a clarification via a tweet as he shared a report carried by a website named Global Village Space calling for the postponement of the IMF program due to an alleged standoff over “anti-corruption regulations”.

The report also claimed that the IMF was calling for the revision of the laws relating to the National Accountability Bureau (NAB), adding that “the government is willing to implement other financial measures, except those related to the NAB”.

The minister, however, dismissed the report as factually incorrect.

“I read with amusement all the tweets and stories about the postponement or delay of the IMF program due to an anti-corruption law. There is no truth in this. The IMF program is on the right way,” Ismail clarified in a tweet.

The IMF had in June 2019 approved a three-year, $6 billion loan “to support Pakistan’s economic plan, aimed at bringing “sustainable growth to the country’s economy and improving living standards.”

The Minister announced on June 28 that Pakistan had received the Memorandum of Economic and Fiscal Policies (MEFP) from the IMF for the combined seventh and eighth reviews.

Under the MEFP, prior actions include the adoption of the federal budget agreed with the IMF and presented to the National Assembly on June 24 and the presentation of a memorandum of understanding duly signed by the provincial governments to jointly provide a cash surplus of about 750 billion rupees. In the center.

The MEFP is based on fiscal measures announced by Ismail in his closing speech on the revised budget to the National Assembly last week, envisaging more than 1,716 billion rupees (2.2% of GDP) of fiscal adjustment, mainly through taxation, including 10% super tax on 13 industries and personal income tax covering monthly income above Rs 50,000 per month.

It is the biggest budget adjustment in a single year that would help turn the primary deficit of around 1.6 billion rupees – the difference between income and expenditure excluding interest payments – in the financial year into a surplus of 152 billion rupees next year.

The Ministry of Finance was forecasting a provincial budget surplus of 800 billion rupees (about 1% of GDP) to help contain a consolidated budget deficit at 4.9% of GDP, but three provinces – Sindh, Balochistan and Khyber Pakhtunkhwa – announced deficit budgets or no surplus. This negated the impact of the surplus of about 125 billion rupees announced by Punjab which was too much lower than its share.

Consequently, the federal government is now required to share with the IMF a memorandum of understanding with the provinces as well as the budget bill adopted by parliament as prior actions to ensure that the budget figures presented in the budgetary framework would be respected.

The two parties would then jointly go through the MEFP shortly before the official signing by the Minister of Finance and the Governor of the State Bank to enable the fund staff to circulate the Pakistan case among the board members. administration for approval.

In all likelihood, two tranches of approximately $918 million each (or $687 million of Special Drawing Rights, or SDRs) would be made available to Pakistan all at once during the last week of July of the first week of August, officials said.

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