IMF sets four tough conditions to revive loan program

June 29, 2022 (MLN): International Monetary Fund (IMF) has set four tough conditions to revive stalled $6 billion loan program, Express Tribune reported today.

These conditions were an increase in electricity tariffs, imposing a levy on petroleum products, ending the government’s role in determining the oil prices, and setting up an anti-corruption task force to review all the existing laws that were aimed at curbing graft in the government departments.

The demands came amid the government’s decision to seek the National Assembly’s approval on Wednesday (today) to amend the Petroleum Products (Petroleum Levy) Ordinance, 1961.

After implementing the conditions, the IMF would present Pakistan’s request for the approval of the loan tranche and revival of the programme to its executive board – a process that may consume another month, the sources said, quoted Tribune.

In its draft Memorandum for Economic and Financial Policies (MEFP) document, the IMF has proposed to club the two pending programme reviews – the 7th and 8th – but did not indicate that it would also approve loan tranches of $2 billion.

The MEFP will form the basis for the staff-level agreement that now Pakistani authorities will try to achieve at the earliest.

However, Finance Minister Miftah Ismail said Pakistan had received the MEFP document that showed the merger of the seventh and eighth reviews of the bailout programme and the country would receive a $1.9 billion loan after their approval. He has already informed Prime Minister Shehbaz Sharif about this development.

The existing IMF programme shows that the approval of the 6th and 7th reviews by the Executive Board of the IMF should pave the way for the release of roughly $960 million worth of two loan tranches, totalling $1.9 billion. However, this schedule will be amended after the merger of the two reviews.

The sources said that in its draft MEFP document, the IMF did not mention increasing the loan tranche size to $1.9 billion. The issue of increasing the loan size will now be discussed by both sides.

However, Prime Minister Sharif while addressing an economic seminar in Islamabad yesterday said, "I got a message from the finance minister early morning that we could get $2 billion from the IMF instead of $1 billion”.

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