IMF Chief anticipates agreement with Pakistan soon
International Monetary Fund (IMF) Managing Director,
Kristalina Georgieva, expressed optimism about reaching an agreement with
Pakistan on the first review of the $3 billion stand-by arrangement. In an
interview with Bloomberg on Wednesday, Georgieva stated, "I expect an
agreement on the review to come within this week. So any day now,"
emphasizing that a deal is very close. The comments were made as an IMF mission
engages in policy-level discussions with Pakistani authorities.
Georgieva commended Pakistani authorities and Finance
Minister Dr. Shamshad Akhtar for adhering to the IMF program during challenging
times. She identified tax collection as a significant concern, noting that
Pakistan's current tax-to-GDP ratio is 12%, insisting it needs to be at least
15% for sustainable economic functioning. Georgieva urged the collection of
taxes from those in Pakistan who can afford to pay.
IMF
forecasts ongoing need for substantial loans and grants in Pakistan
Meanwhile, Pakistan has agreed to impose a 40% windfall tax
on banking sector profits as part of the conditions for securing the second
tranche under the $3 billion loan program. The IMF mission, led by Nathan
Porter, and the Pakistani economic team concluded discussions on all sectors
during their talks. The windfall taxes, amounting to up to Rs55 billion, will
be applied for the financial years 2021 and 2022, with collection scheduled for
December. While the Finance Bill reportedly does not require amendments for the
imposition of the windfall tax, approval from the federal cabinet is still
pending.
In addition, the IMF delegation and the economic team are
expected to draft the Memorandum of Economic and Financial Policies (MEFP)
today. Notably, both parties have reached an agreement not to further increase
the interest rate.
Source: The News