Miftah denies IMF deal postponement

Finance minister says programme 'on track'

ISLAMABAD:

Finance Minister Miftah Ismail on Monday rubbished reports about the suspension of the International Monetary Fund (IMF) programme and said the Extended Fund Facility (EFF) programme with the global money lender was on track.

The minister said that there had been some tweets and stories doing the rounds about the IMF program being postponed or delayed due to some anti-corruption laws, clarifying that there was no truth to these reports.

The programme is on track, the minister stressed.

I have been reading with some amusement all the tweets and stories about IMF program being postponed or delayed due to some anti-corruption law. There is no truth to it. The IMF program is on track. https://t.co/6c0MNvQ0g3

— Miftah Ismail (@MiftahIsmail) July 4, 2022

Miftah was responding to a news report which claimed that the IMF was seeking the review of laws pertaining to the National Accountability Bureau (NAB), adding that "the government is willing to implement other financial measures, except the ones related to NAB".

“I have been reading with some amusement all the tweets and stories about IMF program being postponed or delayed due to some anti-corruption law. There is no truth to it. The IMF program is on track,” he tweeted.

It is pertinent to mention that Pakistan received the Memorandum of Economic and Financial Policies (MEFP) in the last week of June from the International Monetary Fund (IMF) for combined 7th and 8th reviews under Extended Fund Facility (EFF).

The Express Tribune, late last month, had reported that to revive its stalled $6 billion loan programme, the IMF has set four tough prior conditions -- increasing electricity tariffs, the cabinet taking the decision to gradually impose a Rs50 per litre petroleum levy to collect Rs855 billion, and ending the government’s role in determining the oil prices.

Read Pakistan receives MEFP from IMF for 7th and 8th review: Miftah

The IMF has also asked Pakistan to set up an anti-corruption task force to review all the existing laws that were aimed at curbing graft in the government departments, according to sources.

After implementing the conditions, the IMF would present Pakistan’s request for the approval of the loan tranche and revival of the programme to its executive board – a process that may consume another month, the sources added.

In its draft MEFP document, the IMF has proposed to club the two pending programme reviews – the 7th and 8th – but did not indicate that it would also approve loan tranches of $2 billion.

The MEFP will form the basis for the staff-level agreement that now Pakistani authorities will try to achieve at the earliest.

However, the finance minister said Pakistan had received the MEFP document that showed the merger of the seventh and eighth reviews of the bailout programme and the country would receive a $1.9 billion loan after their approval. He has already informed Prime Minister Shehbaz Sharif about this development.

The existing IMF programme shows that the approval of the 6th and 7th reviews by the Executive Board of the IMF should pave the way for the release of roughly $960 million worth of two loan tranches, totalling $1.9 billion. However, this schedule will be amended after the merger of the two reviews.

Read Pakistan could receive up to $2b from IMF, says PM Shehbaz

The sources said that in its draft MEFP document, the IMF did not mention increasing the loan tranche size to $1.9 billion. The issue of increasing the loan size will now be discussed by both sides.

The finance minister told The Express Tribune that Pakistan had requested the IMF to double the loan tranche size to $2 billion. He said that nothing was final yet but the loan amount size could be around $1.5 billion.

Pakistan did not receive the complete MEFP and some of the important tables would be shared by the global lender in a couple of days. Pakistan and the IMF officials also recently held virtual discussions to seek further clarity on the draft MEFP.

The IMF’s decision to merge the 7th and 8th programme reviews was also surprising for Pakistani authorities, as no recent discussions had taken place on the topic, although Islamabad had made a request for the merger during Miftah’s visit to Washington.

In the recent past, Miftah had ruled out the possibility of clubbing both the reviews.

Earlier, the IMF had also clubbed four reviews – second to fifth reviews – but without increasing the loan tranche size. The IMF had only given $500 million as against the $2 billion of four reviews.

The existing document showed that the 7th review was for the end of December 2021 period and the 8th review was for January-March 2022 quarter.

The sources said that the MEFP has indicated that the global lender could extend the programme by June next year but there was no explicit mention.