ISLAMABAD: The International Monetary Fund (IMF) has asked Pakistan to undertake a $16 billion flood before deciding to dispatch its review mission to complete the pending ninth review under the Expanded Fund. Please share more details for post reconstruction. Facility (EFF) Program.
However, the IMF did not give a confirmed date for the completion of the 9th review but the Pakistani side said that the policy-level talks should be started within the current month.
Considering the turbulent markets, the IMF and the Pakistani side decided to continue exchanging data in the coming days, and then explore possibilities to complete the ongoing review.
The Finance Ministry claimed that the IMF had agreed to allow an adjustment in expenditure related to the flood-affected area during the rehabilitation and reconstruction phase.
Amid the crisis, Pakistan and the IMF have decided to continue data exchange to complete the ongoing review and release a $1 billion tranche by the end of December.
A top official said the Pakistani side discussed the possibility of a mini-budget due to a windfall gain tax on the huge profits earned by the banking sector through alleged manipulation of exchange rates.
Top government sources in the Finance Division confirmed to JEE News that the IMF has agreed to send its assessment mission, providing additional information on flood reconstruction.
The IMF was told that the Earthquake Reconstruction and Rehabilitation Authority (ERRA) spent several years rebuilding after the 2005 earthquake and then the 2010 floods.
Reconstruction from the 2022 flood could continue for several years, so using $16 billion a year is out of the question.
“Our core deficit has been contained within the prescribed limits of the fixed surplus target. However, the overall deficit may widen mainly due to rising flood-related expenses,” the official said.
The government also assured the IMF that a joint session of Parliament will be convened to pass the State-Owned Enterprises (SOEs) Bill 2022.
On external financing requirements of $32-34 billion, the IMF was informed that the Pakistani side was assured of oil facility on deposits, additional deposits, jacking of SWAPS agreement and deferred payments of $13 billion.
He added that the rest of the money will be managed successfully on the external financial front.
Dar Meets IMF Officials
According to an official statement issued by the Ministry of Finance on Thursday night, Federal Minister for Finance and Revenue, Senator Muhammad Ishaq Dar, met with IMF Mission Chief for Pakistan Nathan Porter online.
The two sides discussed progress with the IMF’s ongoing program, particularly the impact of the floods on the macroeconomic framework and targets for the current year.
The IMF signaled its willingness to look sympathetically at targeted aid for the poor and vulnerable, particularly those affected by floods.
It was agreed that estimates of priority expenditure on rehabilitation would be prepared during the current year, along with estimates of costs for flood-related humanitarian assistance.
In this regard, engagement at the technical level will be completed expeditiously to proceed with the 9th review.
“Treasury Secretary Senator Ishaq Dar reiterated the GOP’s commitment to the successful completion of the IMF program,” the statement concluded.
