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According to the media, there is an unusual situation when the IMF imposes more conditions and no agreement is reached, however, it is expected that a staff-level agreement will be reached with the International Monetary Fund this week.
In this meeting, the Pakistani authorities will give a briefing regarding the policy rate increase and other preliminary measures including electricity surcharge and price increase. Officials of the Ministry of Finance say that the staff-level agreement between Pakistan and the IMF is expected by Friday, however, sources say that under the terms of the IMF, interest rates are expected to increase by 2 to 2.5 percent.
FBR has also issued an explanatory circular regarding the additional taxes worth Rs 177 billion under the mini-budget released by pre-implementing the conditions of the IMF
The International Monetary Fund (IMF) has demanded the implementation of four preliminary measures, including an increase in electricity prices by Rs. What is it?
The government has convened a meeting of the State Bank’s Monetary Policy Committee on Thursday to meet the IMF’s interest rate preconditions, while progress is expected on the rest of the conditions as well, after which a meeting between Pakistan and the IMF will be held on Thursday evening. Virtual negotiations are likely to make significant progress.
The meeting of the IMF board is expected three to four weeks after the staff-level agreement between Pakistan and the IMF.
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Sources say that now the IMF has placed new conditions in front of Pakistan and a new draft of the Memorandum of Economic and Finance Policy (MEFP) is being given to Pakistan every day. Making changes and presenting more demands.
Sources have said that the finance ministry is ready to impose the surcharge for four months, but the IMF is adamant on the condition of imposing the surcharge on a permanent basis and the IMF is against temporary measures.
According to the sources, the demand of the IMF to increase the interest rate before the staff-level agreement remains, however, the State Bank has called the monetary policy board meeting on Thursday to increase the interest rate.
The IMF has insisted on fixing the interest rate in line with the headline, so it is likely that the interest rate will be increased by two to two and a half percent.
According to the sources, Pakistan is ready to set the interest rate according to the inflation, while the IMF is willing to link the exchange rate to the Afghan border rate, according to the sources, also on the data of primary deficit and current account deficit.
There are differences. Pakistan wants to set a deficit target based on 7-month data, but the IMF is asking to set a target on its own.
Apart from this, IMF is also asking for written assurance on external financing. Sources say that Finance Minister Ishaq Dar has also had an important virtual meeting with American officials and has asked to play a role in the IMF program. A staff-level agreement is likely to be reached this week.
