Pakistan govt agrees to IMF conditions, to get SDRs worth $1.2 billion: Finance Minister Ishaq Dar

Pakistan crisis: Amid a financial crunch like never before and the forex crisis at its peak, Pakistan Finance Minister Ishaq Dar has said that the Shehbaz Sharif-led state government has agreed to the conditions laid down by the Washington-headquartered financial body International Monetary Fund (IMF). Dar added the government has received the Memorandum of Economic and Financial Policies (MEFP) on the completion of the review of a $7 billion loan programme. 

He insisted that the government will go through the MEFP draft over the weekend and will hold a virtual meeting with IMF officials. He was quoted as saying by the Pakistani newspaper Dawn, “We will completely go through the MEFP over the weekend and will hold a virtual meeting with [Fund officials]. It will obviously take a few days.” Dar was speaking at a press conference after an IMF delegation led by Nathan Porter issued a statement about its Pakistan visit. 

The MEFP is a document detailing conditions, steps, and policy measures on the basis of which the two sides declare staff-level agreement. 

Dar also said during the course of this press conference that the “painful but necessary” reforms suggested by the IMF in certain sectors are in Pakistan’s interest. He also criticised the previous Imran Khan-led dispensation for “economic destruction and misgovernance.” 

Dar said the IMF did not trust the Shehbaz Sharif government because of the PTI government’s actions. He added not only did the Imran Khan government not implement the agreement with IMF but also reversed it when a no-confidence motion was brought against the dispensation. 

The finance minister said that Pakistan will get a $1.2 billion disbursement as Special Drawing Rights (SDRs), international reserve assets created by the IMF in 1969 which are allocated to member nations to augment existing official reserves. 

But, what will the Pakistani common face after the agreement between the government and the IMF? Dar said that taxes to the tune of PKR 170 billion will be levied on the common man and untargeted subsidies in the gas and energy sectors will be minimised. Besides this, the government has already fulfilled its commitment to raise the petroleum development levy (PDL) on petrol and diesel to Rs 50 per litre in the coming months. 

He said that the government has also agreed to increase the allocation of funds to the Benazir Income Support Programme (BISP) from PKR 360 billion to PKR 400 billion to help vulnerable sections of Pakistani society affected by inflation. When asked about the dwindling forex reserves, Dar said friendly nations would honour their commitments and inflows would be received. 

Meanwhile, the IMF said in its statement that the key priorities of the MEFP with the Pakistan government comprise bolstering fiscal position with permanent revenue measures, allowing the market to determine the foreign exchange rate to alleviate forex shortage, reduction in untargeted subsidies while scaling up social protection to help the most vulnerable, and those affected by the floods, enhancing energy provision by preventing the accumulation of circular debt and ensuring the viability of the energy sector. 

The global financial body said, “The timely and decisive implementation of these policies along with resolute financial support from official partners are critical for Pakistan to successfully regain macroeconomic stability and advance its sustainable development.”

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