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Pakistan receives letter of intent after agreement with IMF

Pakistan, after reaching a staff-level agreement with the International Monetary Fund (IMF), finally received the letter of intent (LOI), a document that states a party’s tentative willingness to conduct business with another.

The receipt of the LOI indicates that Pakistan’s agreement with the IMF to disburse two tranches totalling $1.17 billion under a loan facility that has stalled is getting closer to completion.

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Finance Minister Miftah Ismail and the acting governor of the State Bank of Pakistan (SBP), Murtaza Syed, are now required to sign the letter.

In the second week of July, an agreement at the staff level was made between the IMF and Pakistan. The Fund’s board would examine the staff-level agreement at a meeting scheduled for August 29. The board would also consider adding $1 billion to a $6 billion program agreed on in 2019.

According to an official, the incumbent government was compelled to publish “a mini-budget for resuming the halted IMF program” after caving to retailer pressure and waiving a set fee that was intended to be collected through power bills.

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The official said, “A mini-budget is planned since the government has agreed to promulgate an ordinance for implementing additional taxing measures to bring Rs18 billion into the national coffers.”

According to local media, Miftah Ismail also confirmed the federal government’s plan to impose additional taxes. “Different proposals are under consideration and a decision would be taken by the prime minister soon,” he said.

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