The government has sent the letter of intent (LoI) back to the International Monetary Fund (IMF) after meeting the requirements, opening the path to the fund’s executive board meeting.
On Wednesday, Finance Minister Miftah Ismail confirmed to media that the LoI was sent back to the monetary fund with his and State Bank of Pakistan Acting Governor Murtaza Syed’s signatures.
This development has paved the way for the IMF’s executive board meeting, wherein Pakistan’s request for approval of the seventh and eighth reviews and release of a tranche of $1.17 billion under the Extended Fund Facility (EFF) would come under discussion.
The executive board meeting will take place on August 29.
The SBP now only holds $7.8 billion in foreign currency reserves, hence the renewal of the IMF program is necessary to fill the deficit in external finance.
Pakistan will need to increase its foreign exchange reserves in order to prevent the creation of a situation resembling default.
It appears that Pakistan will need to apply for another IMF program in the following fiscal year after the current EFF program expires in June 2023.
The finance minister, while answering a question, stated that there had been no decision about the implementation of new taxes via an ordinance. He added that the prime minister would make the final decision in this regard.
According to local media reports, Pakistan promised the IMF in the LoI that the government would raise the price of petroleum items by enacting a levy of up to Rs50, which would be done by 2023.