IMF Sends Letter of Intent for the Release of $1.2 Billion

The Finance Ministry has received a Letter of Intent (LoI) from the International Monetary Fund (IMF), paving the way for the release of the next tranche of $ 1.2 billion, sources told ProPakistani. Sources said that officials from the Ministry of Finance have confirmed receiving the LoI from IMF’s head office. This letter will be signed by the Federal Minister of Finance and Revenue and Governor State Bank and returned to the IMF staff. The signed letter will be presented alongside the documents of the staff level agreement to the Board of Directors during the 25 August meeting in Washington DC. After the approval of the board, it will take two days to release the long-awaited disbursement of $ 1.2 billion, said the sources. The board would also consider adding $1 billion to the $6 billion programme agreed on in 2019. It is to be noted that Pakistan had reached a staff-level agreement with the IMF in July. However, the country is waiting for the IMF’s Board of Directors to make the final decision on the program. The meeting of the board had been scheduled for 25 August, during which the Pakistani side expects the programme to be approved. Under the staff level agreement, the government has already implemented prior actions during the agreed timeframe before 1 August 2022. The government increased the rate of petroleum development levy on petroleum products from 1 August 2022 in compliance with the prior condition of the IMF. In this regard, Miftah Ismail has repeatedly assured the public that the government had met all the conditions set by the Fund and the approval from the board was just a formality. In a recent conference, he mentioned that IMF had asked the government to bridge an external finance gap of $4 billion, and the government managed to arrange over $6 billion with the help of friendly countries, including China, UAE, and Saudi Arabia. Experts also say that the programme will most likely be approved with the IMF confirming that Pakistan had met all the conditions during the previous week. The government expects the economy to stabilize after the inflow of $1.2 billion, with other financial institutions such as the World Bank and Asian Development Bank (ADB) to continue their funding.