IMF-Pakistan discussions begin for $1 Billion loan release

ISLAMABAD: Pakistan and the International Monetary Fund (IMF) have begun policy-level talks to secure the disbursement of a $1 billion loan tranche under the ongoing economic program, as reported on Monday.

Sources revealed that today’s discussions focus on the National Finance Commission (NFC) and agricultural income tax. Officials informed the IMF that agricultural taxation has a revenue potential of Rs 300 billion.

Officials have scheduled a special session on the circular debt management plan. Pakistan has reportedly proposed reducing circular debt by Rs1,250 billion and is considering borrowing the same amount from banks to address the issue.

Sources indicate that Pakistan plans to secure this loan at an interest rate of 10.8% and has proposed a Rs2.8 per unit surcharge on electricity consumers to repay the bank loans.

The negotiations will also feature a dedicated session with NEPRA, where Pakistan will brief the IMF on implementing NEPRA’s power tariff decisions. Additionally, officials will discuss revenue distribution between the federal government and provinces under the National Finance Commission (NFC) framework.

Earlier, the federal government abandoned plans to introduce a mini-budget for FY 2024-25 and chose an alternative approach to address the Rs605 billion shortfall.

Authorities initially planned to introduce the mini-budget but later opted for a different solution. A key part of this plan focuses on swiftly resolving tax-related cases pending in various courts.

Prime Minister Shehbaz Sharif has assured full cooperation, while Chief Justice of Pakistan Yahya Afridi has approved the request to expedite hearings on tax-related cases.

Sources confirm that officials have briefed the IMF on the plan. The Supreme Court has scheduled a crucial hearing on the matter for March 10.