Agreement with the IMF by the end of the week, hopes Naveed Qamar
Federal Trade Minister Syed Naveed Qamar has expressed hope that the International Monetary Fund (IMF) will announce its Staff Level Agreement (SLA) with Pakistan on the Extended Financing Facility (EFF) by the end from this week.
“Pakistan has taken all necessary steps to release a $6.5 billion line of credit and expects close the deal any day now,” he said in an interview with an American broadcaster. Bloomberg.
Minister of State for Finance, Dr Aisha Ghaus Pasha, in a speech to the National Assembly earlier this week, said Pakistan and the global lender were close to reaching a service level agreement . However, she had said that Pakistan was required to undertake fundamental structural reforms, whether under the IMF program or not.
After an official announcement from the Fund, Pakistan would receive a tranche of $1.2 billion under the EFF.
Qamar said the agreement with the IMF would reassure investors and creditors that “Pakistan’s economy is now stabilizing and [the country] took all the right steps.” So in that sense, their money would remain protected, he added.
The Minister said: “The IMF program is the beginning, not the end, of all other incoming funds.
“A pick-up in imports once the country increases its reserves will also benefit exports,” he added.
Pakistan is desperate to release the next tranche of a $1.1 billion loan facility with the IMF, but is struggling to meet tough conditions set by the global financier.
The IMF is demanding that Pakistan increase its pitifully low tax base, end exemptions for the export sector and raise artificially low energy prices that are supposed to help poor families.
The country is in dire need of funds as it battles a heartbreaking economic crisis, with foreign exchange reserves held by the State Bank of Pakistan (SBP) barely covering a month’s worth of imports.
The Pakistani authorities have taken action, including raising taxes, cutting subsidies and devaluing its currency to meet IMF conditionss, Bloomberg reported.
It is relevant to mention that parliament on Monday approved a complementary finance bill which increases the sales tax from 17% to 25% on imports ranging from cars and household appliances to chocolates and cosmetics.
People will also have to pay more for business class air travel, wedding venues, cell phones and sunglasses.
A general sales tax was raised from 17% to 18% – increasing the burden on those already hit by inflation.