February 21, 2023 (MLN): The Staff Level Agreement (SLA) with the International Monetary Fund (IMF) will be finalized within three working days, Secretary Finance Mr. Hamed Yaqoob Sheikh revealed on Tuesday during a media briefing.
Talking about the current economic crisis, he said, the challenges faced by Pakistan will not be resolved immediately as such crucial matters take two to three months to get normalized.
"Along with domestic issues, the surge in commodity prices has also created pressure which drained our forex reserves," he stated.
Despite all the negative newsflows regarding the economy, two loans are going to be rolled over within this week, he added.
On the upside, in light of Pakistan's current economic challenges, the country has reportedly received promising indications of financial support from China and Saudi Arabia, its long-standing allies.
As Pakistan seeks to revive its IMF program, it is counting on its allies to bridge the gap in external finances, with firm assurances from these countries required by the IMF before approving the next tranche.
To note, Pakistan's previous attempts to seek financial assistance from friendly countries, such as the $13 billion bailout claimed by the finance minister in November 2021, were unsuccessful as the countries refused to provide more funds without Pakistan agreeing to IMF conditions.
In a recent development, the parliament has approved a bill to increase the general levy from 17% to 18% and boost taxes on imported luxury items, such as mobile phones, from 17% to 25%. This move is expected to generate additional revenue for the government and help in stabilizing the economy.
The decision comes after the fund urged Pakistan to eliminate subsidies and adopt a market-determined exchange rate. In response, the government has already taken steps to raise energy prices and let the currency weaken.
However, further measures pertaining to monetary policy are still required to meet the IMF's conditions.
It is important to note that the SBP has already raised the benchmark interest rate by 725 basis points since the beginning of 2022 to tackle high inflation, which reached a 48-year high in January.
Overall, the government is taking necessary steps to address the country's economic challenges and meet the IMF's requirements. The approval of this bill is a significant milestone toward achieving those goals.
Copyright Mettis Link News
Posted on: 2023-02-21T16:56:39+05:00
