The Pakistani government has been given a draft of the IMF’s recommended Memorandum of Economic and Financial Policies (MEFP), which discusses the suggested policy actions. The Memorandum of Economic and Financial Policies (MEFP) is a crucial document that outlines all the requirements, actions, and policy directives that two parties must agree upon before a staff level agreement can be declared.
Draft Memorandum of Economic and Financial Policies (MEFP) proposed by IMF shared with Pakistan Government
Once the Draft MEFP has been shared, the two sides discuss the policy measures outlined in the document. Once these are finalized , a staff level agreement is signed, which is then forwarded to the International Monetary Fund’s (IMF) executive board for approval.
Pakistan’s finance minister Isaq Dar revealed that the Pakistani government has received a memorandum from the IMF outlining the terms and conditions for the conclusion of a USD 7 billion loan package. He did add that the two nations have not yet reached a staff-level agreement on the desperately needed rescue for the cash-strapped nation.
From January 31 to February 9, an IMF delegation headed by Nathan Porter was in Islamabad for meetings related to the ninth assessment of the authority programme funded by the IMF Extended Fund Facility (EFF) arrangement. However, there was ambiguity regarding the conclusion of the negotiations and whether a draft MEFP had been presented when the IMF group visited.
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Successful completion of ninth review will bring much needed USD 1.2 billion in form of next tranche
Pakistani economy is in a doldrums, its foreign exchange reserves has dropped below USD 3 billion , it is in desperate need of financial assistance and a bailout package from the IMF to prevent the country from Economic collapse.
The successful completion of the ninth review will bring the cash strapped country to USD 1.2 billion in the form of next tranche.
Pakistan Finance Minister Isaq Dar has also stated that government and IMF officials would start initiating virtual discussions from Monday onwards and remarked,
“I am confirming that the MEFP draft has been received by us at 9 am today (Friday),”
The finance minister further acknowledged that reforms in certain sectors required by IMF were in Pakistan’s interest and criticized the previous Pakistan Tahreek-e-Insaaf led government for country’s economic destruction and misgovernance. Further he also shared that the country would receive a USD 1.2 billion disbursement in the form of Special Drawings Rights after the reviews completion.
“We will completely go through the [MEFP] over the weekend and will hold a virtual meeting with [Fund officials]. It will obviously take a few days.”
Further Dar stated,
“It is necessary to fix those things,”
These reforms are painful but necessary.”
“It is a standard process which can neither be shortened and hopefully they won’t extend it unnecessarily.”
Further he also outlined measures agreed upon between the government and IMF and stated that taxes amounting to 170 billion rupees would be imposed. Also stated that government would introduce a finance bill or ordinance depending on the situation at the time.
Ishaq Dar also elaborated that to impose taxes, government would introduce a finance bill or ordinance , depending on the situation at the time.
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