Economic review this week
ISLAMABAD: The Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, indicated the completion of economic review and policy discussions with Pakistan this week.
Georgieva stated, “I expect an agreement on the review to come within this week. So any day now,” as Pakistan moves closer to the successful resolution of policy-level talks with the IMF.
IMF chief said this while talking to an international newswire on Wednesday.
Simultaneously, officials familiar with the ongoing negotiations between Pakistan and the IMF mission revealed that Islamabad has agreed to implement a 40% windfall tax on banking sector profits, aligning with the conditions set by the IMF.
This move is aimed at securing the second tranche ($700 million) as part of the staff-level agreement under the $3 billion Standby Arrangement (SBA).
The IMF mission, led by Nathan Porter, has concluded discussions on all sectors in collaboration with the Pakistani economic team on Wednesday.
The Pakistani delegation, headed by Caretaker Finance Minister Shamshad Akhtar, included State Bank of Pakistan (SBP) Governor Jameel Ahmad, Federal Board of Revenue (FBR) Chairman Malik Amjed Zubair Tiwana, and officials from the finance and energy ministries who participated in talks with IMF.
The windfall taxes totaling up to Rs55 billion will be imposed for the financial years 2021 and 2022, with the tax on bank profits expected to be collected in December. The Finance Ministry officials also indicate that no amendments to the Finance Bill are required for the imposition of the windfall tax on the banking sector.
However, approval from the federal cabinet is necessary for the implementation of the windfall tax.
Furthermore, it is anticipated that the IMF delegation and the economic team will draft the Memorandum of Economic and Financial Policies (MEFP) today. Finance Ministry officials also noted an agreement to refrain from further increasing the interest rate.
