IMF staff-level agreement: Miftah expects it in June, explains its criticality

ISLAMABAD: Finance Minister Miftah Ismail has stated that a staff-level agreement with the International Monetary Fund (IMF) is expected in June 2022 that would pave the way for a meeting of the IMF Board for approval of the release of the tranche.

While addressing a news conference here on Saturday, the finance minister said that the staff-level agreement is very important because the board meeting of the IMF would be held following it to consider and approve Pakistan’s case.

The finance minister said that the IMF programme is important for the country because it would unlock inflows of other multilaterals such as the World Bank, the Asian Development Bank (ADB), etc.

He said that Pakistan is expecting $1 billion from the WB in the ongoing fiscal year, some loans from the Asian Infrastructure Development Bank and some inflows from the ADB besides $8.9 billion in the pipeline from the WB once the EFF programme is revived.

He said that some good news would also be expected with regard to China next week while the Saudi finance minister has recently stated at Davos that his country was working on a rollover of $3 billion deposited in the State Bank of Pakistan (SBP).

IMF talks: Pakistan to seek 'break' on rates of petroleum product, says Miftah

In addition, he said that Saudi Arabia also wanted to lend some other help which would be disclosed in July 2022. The finance minister said that the IMF EFF $3billion is expected to be increased to $5 billion as he has already requested the Fund to extend the programme by one year.

He said that a positive impact of the increase in petroleum prices has been evident on the rupee value, the stock market, adding that the spike in prices of petroleum products in the international market compelled the government to increase the prices.

He said that there was a need to reduce the impact of inflation, which he maintained was due to the policies of the previous government. He said the prime minister initiated “Sasta diesel, Sasta Petrol scheme” to provide 14 million people Rs2000 from June 2022 –7.3 million BISP recipient families, and 6.7 million other families (non-BISP recipient with less than a poverty score of 37).

He said that we have the data of 6.7 million people of the BISP, who would be given Rs2000 under the prime minister’s cheap diesel and petrol scheme in 2-3 days.

Those with less than 40,000 rupees monthly household income, other than those covered under the BISP should send their ID card number to phone number 786 to qualify for the scheme and start getting the amount from June 1, 2022.

The finance minister said that in case of the death of the head of the household, his daughter would be eligible to apply under the scheme. He said that this is not limited to motorcycle owners but others with less than Rs40,000 per month income are also eligible for the “Sasta Petrol and Sasta Diesel Scheme”. He said that the projected cost of the scheme would be Rs28 billion and government monthly saving on account of petroleum prices increase would be Rs60 billion on the consumption of 20 million litres of petrol and diesel per month.

He said as per the agreement which was signed by his predecessor Shaukat Tarin with the Fund, diesel price should have been Rs300 and petrol price Rs280 inclusive of sales tax and petroleum levy.

He said that according to the Ministry of Petroleum, 85 percent of petrol is used by 40 percent of rich households and it was not a wise thing economically to give them subsidies.

He said that in the former premier Imran Khan’s government, Finance Minister Shaukat Tarin had agreed with the IMF that there would be no subsidy on petroleum products.

He said those 0.8 to 0.9 percent expelled BISP recipients are not being included but are being provided with an opportunity of appeal as they believe that some injustice was done to them.

He said that talks with the IMF were not held about privatization and stated that he did not receive any summary of the increase in electricity prices. The finance minister said that budget for the next fiscal year would be presented on 10th June 2022.

Copyright Business Recorder, 2022