The Pakistani finance minister announced on Tuesday that the government had received a Memorandum of Economic and Financial Policies (MEFP) from the International Monetary Fund, bringing it one step closer to the revival of a stalled $6 billion loan facility. This is a breakthrough in the country’s talks with the IMF and will help to stabilize the economy.
Pakistan entered the IMF program in 2019 to improve its economy. However, the government of now-ousted Prime Minister Imran Khan introduced costly fuel subsidies which led to the program being thrown off track. Pakistan’s new government has removed the price caps, with fuel prices going up by around 70 per cent in less than a month. This fiscal reform is necessary to get the economy back on track and improve the lives of the people of Pakistan.
The Government of Pakistan received a MEFP from the IMF for combined 7th and 8th reviews early this morning. The Minister of Finance announced this in a brief Twitter post without providing further details.
Pakistan and the IMF were negotiating for the completion of the seventh review to resume the loan program under which Pakistan has received $3 billion so far.
“The MEFP is a document that will provide the basis for the conclusion of talks with the IMF,” Dr. Khaqan Najeeb, a former adviser to the finance ministry, said. “The MEFP contains all prior actions and instructions, benchmarks and other timelines along with structural issues … So, to move forward with the implementation of the seventh and eighth review, it is an important development.”
“These developments signal the revival of the loan program,” Samiullah Tariq, director of research at Pakistan Kuwait Investment Company, told Arab News.
Pakistan has been seeking a $2 billion increase in the IMF loan along with an extension in its tenure for about a year.
Last week, the government revised its budgetary targets by reversing economic relief for salaried individuals and imposing a super tax on 13 industries.
“The MEFP will lay out major economic policies that will have to be considered by the government while moving forward,” Tahir Abbas, head of research at Arif Habib Limited, said.