August 16, 2022 (MLN): The loan disbursements under the Extended Fund Facility (EFF) will likely start by the end of this month as the International Monetary Fund (IMF) board is expected to meet on August 29, the federal minister for Finance and Revenue Miftah Ismail said on Tuesday while addressing a press conference.
He said that the government had received a Letter of Intent (LoI) from the fund requiring some edits by the State Bank of Pakistan (SBP) and Finance Ministry, which were done after holding meetings with IMF.
He went on to say that a new LoI has been received today which he would send back after signing adding “We expect the board meeting would be held in August, hopefully, 29 August then the disbursement would start.”
The draft LoI apprised the IMF regarding Pakistan's commitment to the policies and objectives of the economic program supported by an IMF arrangement under the Extended Fund Facility (EFF).
"We also describe our progress and commitment to further policy steps toward meeting these objectives," the draft of LoI available with Mettis Global reads.
The letter also explains the challenging economic and political environment faced by the present government. "While successfully navigating the COVID-19 pandemic, the war in Ukraine has created uncertainty through higher international commodity prices and adverse external financing conditions. This has already resulted in higher inflation, elevated spreads, and a wider current account deficit," it added.
The minister, in a press briefing also said that the rupee has been performing as the best currency in the world following continuous appreciation against the dollar for the first 15 days of August. Earlier, US Dollar had gone out of control after July 17 and reached to Rs239 exchange rate.
He said, at that time when the rupee was depreciating in July he had argued that there was a need to control imports and bring it to the level of exports plus remittances to strike balance.
The minister said that the imports were recorded at $80 billion during the fiscal year 2021-22 whereas the exports stood at $ 31.7bn, bringing the trade deficit to $48.3bn. During the year, the remittances were recorded at $30bn. Consequently, the current account deficit (CAD), he said, was recorded at $17.5 last year despite the fact had PTI was especially focusing to bring it down.
The government is monitoring imports, exports, and remittances adding that so far there had been $3.4bn outflows and $4.1bn outflows during the month of August. So more dollars are coming in than coming out, he added.
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