Miftah confirms IMF MEFP received for 7th, 8th reviews

ISLAMABAD   –  Pakistan has received the draft of Memorandum of Economic and Financial Policies (MEFP) from the International Mone­tary Fund for the combined 7th and 8th reviews.

“Today, the Government of Pakistan has received an MEFP from the IMF for the combined 7th and 8th reviews,” said Fed­eral Minister for Finance and Revenue Miftah Ismail on Tues­day. The draft MEFP is a pre­requisite for paving the way for moving towards striking a staff-level agreement.

Finance Minister and Gov­ernor State Bank of Pakistan would sign the MEFP docu­ment after reviewing it. Later, the staff-level agreement will be presented before the IMF’s Ex­ecutive Board next month for approval after which the tranch­es will be released.

Pakistan would receive two tranches worth of $1.9 billion from the IMF, one as $900 mil­lion as the seventh tranche and $1 billion as the eighth tranche, the Finance Minister said while addressing the conference titled “Turnaround Pakistan”.

He once again said that the incumbent government has saved the country from the de­fault through difficult decisions. “Now, there is no chance that Pakistan will default,” he said and added, “The situation is still difficult; we need to tread on path.”

He made it clear that the gov­ernment would have to follow fiscal discipline, as the country cannot afford massive deficit budgets of Rs5 trillion annually.

Addressing the conference, the Finance Minister said that Pakistan is having lower tax to GDP ratio of 8.6 percent, which is lowest in the world. He fur­ther said that the incumbent government would improve the tax collection of the coun­try. The federal government has imposed super tax on rich peo­ple instead of putting addition­al taxation burden on the poor people. He added that taxes had been increased even on compa­nies owned by the prime minis­ter’s sons.

“Even my company will have to pay more taxes now,” Ismail said and added that we can only ask the nation to sacrifice if we do the same. He said that the government has not taken indi­rect taxes instead it took direct tax on wealthy people earning more than Rs150 million.

Similarly, the government has also imposed super tax on 10 percent of industries. The gov­ernment had imposed direct taxes as opposed to non-direct as the former were non-infla­tionary. “This year, we will take 33pc more tax than last year which is an achievement.”

He once again criticized the previous government for giv­ing Rs120 billion monthly sub­sidy on oil products, which was three times higher than the monthly expenditure of run­ning civil government. There­fore, the government had taken tough decisions to increase oil prices to save Pakistan from de­fault. He thanked the nation for supporting the government and understanding the need to hike petrol and diesel prices.

The Finance Minister said that the government is also bringing shopkeepers into the tax net. In the coming days, the govern­ment would also bring builders, real estate agents, car dealers and carpenters into tax net. He said that the government would facilitate the business commu­nity in taxation. He once again asked the affluent class to pay their due tax for the prosperity of the country.

He said that economic growth in Pakistan required strong fis­cal discipline and econom­ic management. “Prime Minis­ter Shabaz Sharif’s dream is to take Pakistan towards self re­liance, sustainable and inclu­sive growth,” he said and added “This goal is not difficult.”

He said that incumbent gov­ernment has provided relief to the poor people by provid­ing monthly stipend of Rs2000 per month. “We intend to pro­vide relief to 6 million people, of which 4 million are already registered. The Prime Minis­ter has provided a scheme for cheap petrol and food which will benefit 6 million people,” he said.

Talking about the economic situation, the Finance Minister said that the country’s debt pay­ment has increased massively in last few years. The country’s debt servicing was Rs1,500 bil­lion per year in 2018 when PML-N left the government, has now gone to Rs4,000 billion.

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