Questions arise after Miftah Ismail hints at immediate revival of IMF program

Some questions arose after Finance Minister Miftah Ismail hinted at the revival of the International Monetary Fund (IMF) loan program within one to two days.

Yesterday, Miftah Ismail had claimed that the IMF loan program will be restored within one to two days which raised some questions about the procedural requirements.

Economic analysts expressed surprise over Ismail’s statement and questioned whether the procedural requirements have been completed. They said that the IMF agreements would need the approval of staff-level officials first and later on the executives-level for giving it the final shape.

They added that before the disbursement of a tranche, there would be separate meetings of staff-level, IMF board and finance secretary with the global financial institution’s officials.

The statement came at a time when an English daily reported that Pakistan sought Washington’s support” for renewing its Extended Fund Facility (EFF) with the IMF.

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According to Dawn newspaper, Pakistan signed a 39-month, $6bn EFF in July 2019, but the Fund stopped the disbursement of about $3bn when the previous government reneged on its commitments.

Media reports had claimed that Islamabad was “seeking Washington’s support” for renewing its Extended Fund Facility (EFF) with the IMF.

Dawn quoted diplomatic sources as saying that the United States has agreed to help Pakistan negotiate a deal with the International Monetary Fund (IMF).

Currently, Islamabad wants the IMF to not only resume disbursements but also expand the size and duration of the programme.

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The finance minister had also announced that taxes will now be imposed on the elites and relief will be given to the poor people. He had said that the IMF loan has no connection with the salary raise.

Economic experts believed that IMF has not objected to the reduction of tax slabs but it showed concerns regarding the tax reforms and budgetary statistics as it was not in accordance with its plan.

Moreover, the finance minister had also announced that China will also provide financial assistance to Pakistan within a few days but it was not disbursed so far after over a week.