State Bank to receive IMF loan worth $2.77 billion on August 23: Tarin

ISLAMABAD: The central bank will receive the International Monetary Fund’s (IMF) unconditional loan worth $2.77 on August 23, 2021, a senior government official said on Thursday.

In a hurriedly called press conference, Finance and Revenue Minister Shaukat Tarin said that the IMF has approved the largest-ever distribution of monetary reserves of $650 billion to boost the global economy and help the emerging and low-income nations deal with the mounting debt and Covid-19 crises.

“Pakistan’s share in [the] IMF SDRs is 0.43 per cent and as per this equation, we will get $2.77 billion at a very nominal interest rate,” he said.

Tarin said that after receiving this loan amount, the forex reserves of the country will further increase, adding that the government wanted to spend this money in consultation with the relevant authorities and in a constructive manner.

The finance minister admitted that the circular debt reached an unsustainable level, owing to which the IMF had asked the government to raise electricity tariff in March.

“I told [the] IMF that increasing the tariff is not a solution and Prime Minister [Imran Khan] also supported my stance because any spike in the power tariff will make our industry more uncompetitive and trigger further inflationary pressures,” he said.

Tarin said that the other option given by the IMF was to add further Rs150 billion in personal income tax, which is collected around Rs113 billion to Rs115 billion/annum right now.

“For me it is very unfair to increase the tax rate on those who were already paying taxes. I told [the] IMF that we will bring those individuals and sectors in the tax net, which are not paying taxes on their income. He said though [the] IMF conditionalities are very tough but still we’re keen to remain in their programme.”

The finance minister said the government will convince the IMF on Kamyab Jawan Programme and will hold one-to-one dialogue with them.

“We know very well that it’s a visionary project and it will work well to overcome unemployment and poverty,” he added.

Regarding the Auditor General report, the finance minister said there are 34,000 paragraphs for which a lot of time is needed to answer those objections.

He expressed the hope that the agreement with the Independent Power Producers will be reached within two to three months.

Tarin dispelled the impression that he wants to quit the job because of health issues. “I suffered from Covid and after that had a minor heart problem but now I am quite fine and healthy,” he said.

The World Bank will also provide $1 billion soon, he said, adding that as long as the economy is growing the current account deficit will not be an issue and if it remains in the range of 1.5 per cent to 2.5 per cent of GDP it will be easily managed.