Pakistan has completed the required steps to unfreeze a $6.5 billion credit line, according to Syed Naveed Qamar, the Federal Minister for Commerce, and is anticipated to reach an Extended Fund Facility (EFF) staff level agreement with the International Monetary Fund (IMF) this week.
The Minister of State for Finance, Dr. Aisha Ghaus Pasha, said that although Pakistan and the IMF are close to reaching an Agreement, fundamental structural changes are required regardless of whether they are covered by the IMF programme or not.
Pakistan will get a $1.2 billion tranche from the EFF after the official announcement. According to Qamar, the arrangement would offer creditors and investors assurance that their money would be safe and that Pakistan’s economy was beginning to stabilise.
Qamar stressed that more imports would help exports and that the IMF programme is just the beginning of other funding coming in.
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The IMF has imposed strict requirements on Pakistan, including boosting artificially low energy costs, broadening its tiny tax base, and abolishing exemptions for the export sector. While the foreign exchange reserves held by the State Bank of Pakistan can only finance one month’s worth of imports, the nation urgently needs money.
Pakistan has increased taxes, reduced subsidies, and depreciated its currency to comply with IMF requirements. A supplementary budget measure that hikes general sales tax from 17 to 18 percent and import sales tax from 17 to 25 percent was also adopted, adding to the burden on already-inflation-stricken people.
