Finance Minister Miftah Ismail addresses a press conference in Islamabad. Photo courtesy PID
The Government of Pakistan on Tuesday received the Memorandum of Economic and Financial Policies (MEFP) from the International Monetary Fund (IMF) for the combined seventh and eighth reviews of a suspended $6 billion Extended Fund Facility (EFF), Finance Minister Miftah Ismail has confirmed.
“Early this morning, the Government of Pakistan has received an MEFP from the IMF for combined 7th and 8th reviews,” he said in a brief posting on Twitter. Confirming the development, Prime Minister Shehbaz Sharif later told the “Turnaround Pakistan” conference in Islamabad that he had been informed of the document’s delivery, adding that while this loan would help ease pressure on the economy, the government’s “ultimate goal” was self-reliance.
However, despite the hopeful messaging from the government, the MEFP does not signal the formal resumption of the loan facility that has been suspended since earlier this year. A MEFP outlines prior actions that the IMF feels are required before its board considers Pakistan’s case for the approval and subsequent disbursement of the next tranche of the ongoing bailout—likely $1 billion.
In recent weeks, the government has undertaken several “harsh measures” to increase the possibility of reviving the loan facility, including ending subsidies on fuel products, announcing an intent to gradually impose petroleum levy in the coming months, and deliver a “surplus” budget. In this regard, the government has revised the budget for fiscal year 2022-23 that it presented earlier this month, reducing the taxable slabs for salaried individuals, imposing a ‘poverty tax’ on high-income individuals, and levying a ‘super-tax’ on several industrial sectors.
The entire exercise is aimed at ensuring the IMF deal is revived, as it would help stabilize the economy, and also open the door for Pakistan to seek additional loans and grants from lenders and “friendly” nations. In a statement issued last week, IMF’s Resident Representative to Pakistan Esther Perez Ruiz said that discussions between the Fund and Pakistan were ongoing, adding that “major progress” had been made regarding the budget for the next fiscal year.