Economic distress: Govt writes to IMF; requests visit next week

IMF visit

Islamabad: After deciding to implement all tough directions of the global lender, the federal government Thursday wrote a letter to the International Monetary Fund (IMF) to send its mission to Pakistan at the earliest, preferably next week, for breaking the deadlock and accomplishing the pending ninth review under the $7 billion Extended Fund Facility (EFF).

According to sources, the government has decided to invite the IMF as there is no other choice but to revive the program on an immediate basis.

The decision was taken during a high-powered meeting of the economic team chaired virtually by Prime Minister Shehbaz for the second consecutive day.

It has been decided by the government to invite the IMF to the negotiation table to sort out all thorny issues, including implementing a market-based exchange rate. The meeting also considered slapping withholding taxes on cash withdrawals and other banking transactions as part of a “mini-budget”.

The IMF also demands an increase in electricity and gas rates (by almost an average of Rs7 per kW-hour and Rs750 per MMBtu, respectively), and additional taxes to make up for the revenue slippages to contain the fiscal deficit within the original program targets with adjustments for flood expenditure.

Earlier this month, PM Shehbaz had a phone call with the Managing Director of the IMF, wherein he had told her about the government’s resolve to complete the terms of the program.

Before that, the PM had announced that the IMF delegation would visit Pakistan within two to three days to complete the ninth review of Pakistan’s $7 billion Extended Fund Facility (EFF).

Under the ninth review, Pakistan will receive $1.18 billion, which will shore up the economy and help ease the pressure on dwindling forex reserves.

IMF or no IMF? | By Farrukh Saleem