By Anzal Amin
ISLAMABAD: The IMF has provided Pakistani authorities with the draft of the Memorandum of Economic and Financial Policies (MEFP) to help build consensus.
This move could pave the way for reaching a staff-level agreement under the $7 billion Extended Fund Facility (EFF).
According to sources, some relief measures are being considered for the construction and real estate sectors. However, it is yet to be decided whether these relief measures will be implemented immediately or included in the upcoming budget. It is worth noting that negotiations between Pakistan and the IMF concluded without a final agreement, and a staff-level agreement remains essential before the release of a $1 billion tranche.
Meanwhile, the IMF has imposed strict conditions for financial discipline, Express News reported.
Sources indicate that the Federal Board of Revenue (FBR) fell short of its tax collection target, prompting expenditure cuts and additional measures to achieve a primary surplus. The IMF has also proposed reducing electricity prices and maintaining the petroleum levy at Rs 70 per litre.
Furthermore, the IMF has inquired how the government plans to address circular debt, as previous cross-subsidy models have failed in the past. In response, the government has presented a six-year plan to eliminate circular debt in the energy sector.
According to sources, if the IMF approves the draft, the Pakistani government is expected to receive financial relief.
Earlier, the IMF mission returned to Washington without reaching a staff-level agreement with Pakistan for the release of over $1 billion loan tranche but it said that “significant progress” was made during the talks towards striking a deal.
A day after the end of the first review talks, the IMF issued a press statement that acknowledged “strong implementation” on the programme. But it remained short of announcing the Staff Level Agreement, which is critical to maintaining economic stability in Pakistan.
