What's new

International Monetary Fund (IMF) to Pakistan .. Updates

IMF shares MEFP draft with Pakistan to finalise $7b EFF deal​


According to sources, some relief measures are being considered for the construction and real estate sectors.

Irshad Ansari
March 18, 2025

tribune


The IMF has provided Pakistani authorities with the draft of the Memorandum of Economic and Financial Policies (MEFP) to help build consensus.

This move could pave the way for reaching a staff-level agreement under the $7 billion Extended Fund Facility (EFF).

According to sources, some relief measures are being considered for the construction and real estate sectors. However, it is yet to be decided whether these relief measures will be implemented immediately or included in the upcoming budget.

It is worth noting that negotiations between Pakistan and the IMF concluded without a final agreement, and a staff-level agreement remains essential before the release of a $1 billion tranche.

Meanwhile, the IMF has imposed strict conditions for financial discipline, Express News reported.

Sources indicate that the Federal Board of Revenue (FBR) fell short of its tax collection target, prompting expenditure cuts and additional measures to achieve a primary surplus. The IMF has also proposed reducing electricity prices and maintaining the petroleum levy at Rs 70 per litre.

Furthermore, the IMF has inquired how the government plans to address circular debt, as previous cross-subsidy models have failed in the past. In response, the government has presented a six-year plan to eliminate circular debt in the energy sector.

According to sources, if the IMF approves the draft, the Pakistani government is expected to receive financial relief.

Earlier, the IMF mission returned to Washington without reaching a staff-level agreement with Pakistan for the release of over $1 billion loan tranche but it said that "significant progress" was made during the talks towards striking a deal.

A day after the end of the first review talks, the IMF issued a press statement that acknowledged "strong implementation" on the programme. But it remained short of announcing the Staff Level Agreement, which is critical to maintaining economic stability in Pakistan.
 

IMF approves tax cut on property purchases in Pakistan​


In a virtual meeting, Pakistan and IMF agreed to lower the federal excise duty rate for property buyers.

Irshad Ansari
March 22, 2025

tribune



The International Monetary Fund (IMF) has agreed in principle to a partial reduction in the withholding tax rate on property purchases, following a request from the Federal Board of Revenue (FBR).

The new rate, which will be reduced by two percent, is set to come into effect in April 2025. However, the withholding tax rate imposed on property sellers will remain unchanged.

According to sources, a recent virtual meeting between Pakistani officials and the IMF concluded with an agreement to lower the federal excise duty rate for property buyers. However, the tax on property sellers will still be collected at the existing rate.

In addition, the IMF has also agreed to a reduction of Rs60 billion in the tax revenue target for March 2025, as requested by the FBR.

The sources indicated that this development would pave the way for consensus on the Memorandum of Economic and Financial Policies (MEFP) and a staff-level agreement, which is expected to be finalized next week.

Regarding the tax reduction on property transactions, FBR had previously requested the IMF to lower withholding tax rates for both buyers and sellers under Sections 236C and 236. However, the IMF has only agreed to reduce the tax rate for buyers under Section 236 by two percent.

Additionally, the IMF has permitted the government to raise PKR 1,257 billion from banks to address the circular debt issue in the electricity sector.
 

IMF turns down Islamabad's request to reduce property taxes​


Rejection comes as Islamabad struggles to meet the conditions for securing a staff-level agreement

Irshad Ansari
March 24, 2025

The International Monetary Fund (IMF) has turned down Pakistan’s request to reduce taxes on property transactions, sources familiar with the negotiations said on Monday.

The rejection comes as Islamabad struggles to meet the conditions for securing a staff-level agreement, which would pave the way for further financial assistance.

According to sources, the IMF also refused to lower withholding tax by 2% and rejected Pakistan’s request for tax relief on tobacco and beverages.

Additionally, there was no agreement on relaxing Pakistan’s revenue targets for March 2025, making it harder for the government to meet its fiscal commitments under the IMF programme.

Pakistan will be required to provide additional guarantees to finalise the staff-level agreement, sources said. The IMF has also set a condition preventing provinces from intervening in wheat procurement.

Meanwhile, the global lender has shown willingness to incorporate climate finance into the programme. Under the Resilience and Sustainability Facility, Pakistan will be offered financial assistance for climate-related initiatives.

With key tax relief requests denied, Pakistan faces further pressure to implement tough fiscal measures. The government must now provide additional assurances to unlock the next tranche of IMF funding.
 

IMF allows Pakistan to cut power tariff​


The development comes days after Pakistan and the IMF reached a staff-level agreement

Irshad Ansari
March 27, 2025

tribune



The International Monetary Fund (IMF) has allowed the Pakistan government to reduce electricity tariffs by Rs1 per kilowatt-hour for all consumers.

The relief will be financed through revenue collected via a levy imposed on captive power plants using natural gas, the IMF said in a statement.

The move is part of a broader relief package the government is working on for electricity users.

According to official sources, the reduction could lessen the financial burden on consumers by up to Rs100 billion. A household consuming 500 units of electricity would see a monthly saving of Rs500 under the new plan.

The relief will be funded through revenue generated from a levy imposed on gas consumed by captive power plants. The IMF stated that the decision is part of ongoing reforms in the energy sector.

The development comes days after Pakistan and the IMF reached a staff-level agreement, unlocking access to an additional $1 billion under the Extended Fund Facility (EFF).

According to the IMF, inflation in Pakistan has reached its lowest point since 2015, and the country’s economic indicators show signs of further improvement.

The IMF's executive board will approve the EFF's second tranche of $1 billion and the $1.3 billion RSF new facility either by the end of April or early May, according to Pakistani authorities.

However, the fund will release only $1 billion while the $1.3 billion will be given over a period of 28 months and subject to implementing about 13 conditions, including carbon levy.
 
1743163534345.png
 
International Monetary Fund (IMF) Director of Communications Julie Kozack said on Friday that Pakistan will receive $1.3 billion in climate financing.

Speaking at a press conference, Kozack highlighted that discussions with Pakistan covered both the Extended Fund Facility (EFF) and climate financing, Express News reported.

Kozack further mentioned that Pakistan’s 37-month EFF program, approved in September of the previous year, remains in place.

Earlier on Wednesday, Prime Minister Shehbaz Sharif confirmed the new $1.3 billion deal with the IMF during a Cabinet meeting in Islamabad.

Subject to approval by the IMF board, Pakistan will receive $1.3 billion under a new climate resilience loan program, which will span 28 months.

Additionally, a staff-level agreement will release $1 billion for Pakistan under the $7 billion bailout program that was agreed upon last year.

Nathan Porter, IMF mission chief to Pakistan, stated in a press release that the staff-level agreement covers both the first review of the 37-month Extended Fund Facility (EFF) and the new 28-month arrangement under the IMF’s Resilience and Sustainability Trust. The total access to funds under the new arrangement amounts to around $1.3 billion over the next 28 months.

Porter also noted that Pakistan has made significant progress in restoring macroeconomic stability and rebuilding confidence despite challenging global conditions over the past 18 months.

Once approved by the IMF board, Pakistan will have access to about $1 billion under the EFF, bringing the total disbursements under the program to approximately $2 billion.
 
1743284134170.png
 

Pakistan Affairs Latest Posts

Back
Top Bottom