ISLAMABAD – Tuesday, in response to another demand of the International Monetary Fund (IMF), the administration voted to raise sales tax.
In this respect, Ministry of Finance officials have handed the international lender a draught of the Medium-Term Economic Framework (MEF). Tomorrow, the IMF will answer again to the Ministry of Finance.
According to a pact with the IMF, electricity users would likely pay an extra Rs17 billion.
According to reports, the IMF will examine and return the Ministry of Finance’s Memorandum of Economic and Financial Policies (MEFP) draught. To please the IMF, the government has made a principled choice to raise the sales tax in different sectors.
There is a great probability that the IMF will make significant headway this week, according to the finance ministry, and the government will shortly determine whether to introduce an ordinance for the Rs170 billion mini-budget.
In addition, the federal cabinet will discuss the nature of the mini-budget and the ordinance.
Pakistan and the IMF begin virtual rescue package discussions
Pakistan and the International Monetary Fund (IMF) have begun discussions about the release of the ninth installment of the Extended Fund Facility (EFF). The federal government hopes that these virtual meetings will result in an agreement that will alleviate the mounting strain on the nation’s struggling economy.
Finance Secretary Hamed Yaqoob Sheikh said that “the length (of the negotiations) cannot be determined, but we want to conclude them as soon as possible.” Islamabad and an IMF mission engaged in extensive negotiations for ten days, from January 31 to February 9, but were unable to strike an agreement.
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In a previous statement, the IMF indicated that both parties had agreed to remain active and that “virtual conversations would continue in the coming days to finalise implementation specifics” of the measures outlined in Islamabad.
The International Monetary Fund (IMF) and Pakistan were to start discussions digitally in an effort to negotiate an agreement that would release vital money to keep the cash-strapped south Asian nation afloat.
Dar said the government would levy Rs170 billion in taxes via a mini-budget in advance of an IMF settlement.
A Pakistani official informed an international wire agency on Monday that the two parties were unable to achieve an agreement last week, and that a visiting IMF mission left Islamabad after ten days of discussions, but that negotiations will continue. Pakistan is in desperate need of funding as it struggles with a severe economic crisis.
Finance Secretary Hamed Yaqoob Sheikh told Reuters in a text message that negotiations will resume on Monday, but that the duration of the discussions could not be determined. “We aim to conclude things as quickly as possible,” he said.
The talks focus on securing an agreement on a reforms plan under the country’s 2019 $6.5 billion bailout package.
A consensus on the ninth programme review would release nearly $1.1 billion.
Cash-strapped Pakistan is to introduce additional levies totaling 170 billion rupees this month in order to receive a massive bailout, which would exacerbate the country’s already skyrocketing inflation.
Pakistan’s inability to satisfy the terms has resulted in the IMF delaying the payment of $1.1 billion from a $6 billion agreement agreed to January 2019.
After the most recent round of negotiations concluded, the IMF proposed many measures, including the imposition of additional levies.
Although foreign organisations pledged more than $9 billion to assist Pakistan recover from the floods, the money would only be used for particular projects and not as cash.
To comply with the conditions of the deal, Finance Minister Ishaq Dar is ready to levy new levies and slash energy and gas subsidies.
After the additional taxes are implemented, Pakistan’s inflation rate is anticipated to rise from 26% to 40%, but any further delay in receiving an IMF bailout will make life much more difficult for the average citizen.