Islamabad, 13 August 2022 (TDI): Miftah Ismail, the Finance Minister of Pakistan and Murtaza Syed, Acting Governor of the State Bank of Pakistan (SBP) will jointly sign the letter intent from International Monetary Fund (IMF).
Pakistan has received a letter of intent from the IMF. Along these lines, the Government of Pakistan is ready to seal the bailout deal.
A staff-level agreement between the IMF and Pakistan over a nine-month extension of the bailout’s term and a $1 billion increase in its size to $7 billion was announced on July 13. This will also include an upfront release of roughly $1.18 billion.
Pakistan’s agreement with the IMF released two tranches worth 1.17 billion US dollars. This is under a curb loan provision that had trudged nearer to the completed line according to the agreement on the Letter of Intent (LoI) by IMF to Pakistan.
Furthermore, within the second week of July, a deal at the management level had been made between the IMF and Pakistan. This Fund’s board will indeed examine the personnel agreement at a meeting scheduled for August 24.
Aside from that, the panel will also think about increasing a 2019 agreement for a 6 billion USD program by 1 billion USD. The government of Pakistan has opted to promulgate an ordinance for supplementary tax reform.
This is so as to raise 18 billion Pak-Rupees for the national coffers, thus a mini-budget is planned. Moving ahead, with the agreement, the government may levy higher tax rates on cigarettes, tobacco leaves, fertilizer, and other items in order to appease the IMF.
Also, additional taxes are being considered for a broad range of industries. Hence, through such a Presidential Ordinance, tax brackets on cigarettes as well as the preparation of tobacco leaves can be increased.
However, the government seems to have principally opted to raise 12 billion Rupees from the tobacco industry, widening the gap.
Also, additional 6 billion Rupees will be recovered by imposing a tax payable on tobacco’s Green Leaf Threshing Process (GLTP). This will allow the payroll tax to be raised in an expandable configuration.
