IMF defers Pakistan's 6th review to release $1 billion under fund facility

The International Monetary Fund (IMF) on Monday deferred Pakistan's consideration of the completion of the sixth review and release of a USD 1 billion tranche under the Extended Fund Facility (EFF).

The Executive Board of IMF made the decision of postponement after receiving a request from the Pakistani authorities. The consideration was scheduled for January 12, 2022, reported The News International.

When contacted about the exact date for consideration of Pakistan's request by the Fund's Executive Board, the IMF's Resident Chief in Pakistan, Esther Perez Ruiz, replied, "The Board meeting for consideration and eventual approval of the 6th Review under the EFF is being postponed at the request of the authorities. The new date is yet to be determined."

 

Top official sources confirmed to The News here on Sunday that the IMF's Executive Board had removed from its calendar 2022 consideration of Pakistan's case for completion of the 6th review scheduled for January 12 and release of USD 1 billion under the EFF programme.

Now the IMF's Executive Board will consider only Nepal's request under the Extended Credit Facility on January 12, 2022.

The interesting stage is about to begin as Parliament will have to initiate a debate on amended finance and State Bank of Pakistan (SBP) autonomy bills, reported The News.

With the Supplementary Finance Bill and the State Bank of Pakistan Autonomy Bill, the Pakistan government aims to meet certain conditions set by the IMF.

The Ministry of Finance thinks that the Tax Laws Supplementary bill was expected to be approved probably next week from the National Assembly.

However, the SBP's Amendment Bill may take time because it requires approval from both Houses of Parliament, so the treasury benches will have to devise an effective strategy to get smooth sailing for its approval, reported The News.

The Pakistani side argued that the IMF's staff had placed two conditions, including seeking approval of the parliament on two key bills, including Tax Laws Supplementary Bill and the second, State Bank of Pakistan (SBP) Amendment Bill 2021.

The government had introduced these two bills before the Parliament and currently, the Upper House of Parliament (Senate) was scrutinising mini-budget for finalising its recommendations on mini-budget, known as Tax Laws Supplementary Bill 2021 under which the government proposed withdrawal of GST exemptions, jacking up tax on vehicles registration, increasing withholding tax on mobile users from 10 to 15 per cent and some other administrative changes and promised to collect tax revenues to the tune of Rs 343 billion on per annum basis.

However, independent economists estimate that the withdrawal of GST exemptions and other measures through the Tax Laws Supplementary Bill, if approved by the Parliament in its existing shape, could hardly fetch Rs 200 billion maximum.

Meanwhile, the parliament has not yet kick-started its deliberations on the controversial SBP Amendment Bill 2021 because many independent economists and analysts suggested that it required major reviews, changes and only then it could be approved. Otherwise, the government might have to face stiff resistance, especially from the opposition benches.

Pakistan is currently marred with financial challenges as the country's trade deficit is surging high, inflation is rising and the government had to bring the mini-budget to hike taxes to meet certain demands of the IMF. Imran Khan-led Pakistan Tehreek-e-Insaf (PTI) government has been criticised by the Pakistan Muslim League-Nawaz (PML-N), Pakistan Peoples Party (PPP) and other opposition parties in Pakistan with some leaders demanding Imran Khan to resign.