Pakistan’s request to extend the assessment of its $6 billion loan programme, which was due for January 12, was accepted by the International Monetary Fund (IMF). The evaluation will now take place at the end of January.
After its submission in the National Assembly on December 30, 2021, the government presented the Finance (Supplementary) Bill 2021, often termed as the mini-budget, to the Senate on January 4, 2021, together with the State Bank of Pakistan (Amendment) Bill 2021.
The two bills have now been approved in order for the IMF’s Executive Board to pass the country’s $6 billion Extended Fund Facility‘s sixth review. The administration had hoped to enact the two legislations before the IMF board of directors meeting on January 12.
After approval by parliament, the mini-budget will generate extra revenues of Rs 343 billion, or 0.6% of GDP, primarily through the removal of sales tax exemptions.
Despite Finance Minister Shaukat Tarin’s denial that the new tax measures are inflationary, the removal of exemptions and the hike in the sales tax rate on a wide range of commodities are expected to raise prices in the future.
The opposition in the parliament has slammed the legislative decision. The Finance (Supplementary) Bill was sent to the House Committee on Finance by the Senate chairman, who instructed the committee to conclude recommendations within three days.
According to a senior finance ministry official, the IMF had not set a deadline for the evaluation, which was supposed to smooth the stage for the release of a $1 billion tranche, on January 2.
Pakistan’s review was still on the agenda for the IMF board meeting on January 12, according to the source, and the ministry had already sent the relevant papers. He said that the IMF board met on a regular basis and that the government had requested a postponement of the assessment by the Washington-based lender.