Washington, 3 February 2022 (TDI): The International Monetary Fund’s (IMF) executive board held a meeting in Washington to consider Pakistan’s request for a loan. Satisfied with the progress Pakistan has made so far, the IMF approved a $1 billion tranche loan for the country under the Extended Fund Facility (EFF).
The meeting was rescheduled twice after the IMF received requests from Pakistan authorities. The meeting was originally set to take place on January 12, 2022. Pakistan’s Federal Minister for Finance and Revenue, Shaukat Tarin said he was pleased with this outcome.
I am pleased to announce that IMF Board has approved 6th traunche of their programme for Pakistan.
— Shaukat Tarin (@shaukat_tarin) February 2, 2022
In order to successfully acquire the loan, the government had to clear the State Bank Amendment Bill 2021 from parliament. The SBP bill was designed to combat inflation, but in doing so it ignored growth prospects.
It wasn’t well-received by many independent economists. The fund also required signing off on a mini-budget and an audit of Covid-19 expenditures, along with details about the beneficial ownership of coronavirus vaccines.
In November last year, Shaukat Tarin admitted that these conditions would marginalize the poverty-stricken, but promised targeted subsidies to help them out. The Prime Minister of Pakistan, Imran Khan was initially against the terms of the loan but eight months later he signed off on them.
The passing of this bill caused a ruckus as the bill was supported by 44 senators while 43 voted against it. Additionally, Pakistan recently increased its tax rates. On the 13th of January, Pakistan’s National Assembly passed the Finance Supplementary bill, which imposes several new tax hikes. General Sales Tax (GST) increased to 17% from 10%.
Under this agreement, the total amount disbursed to Pakistan will total $3 billion. The next review under the Extended Fund Facility is set for April 2022, while the final review is in September 2022.
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