Business

‘Close’ to agreement with Pakistan on review: IMF chief

Published

1 year ago

Farwa

Policy-level talks close to success, say sources.
Windfall tax to be levied for financial years 2021, 2022.
IMF, economic team likely to prepare MEFP today.

International Monetary Fund’s (IMF) Managing Director Kristalina Georgieva said that the review of the policy talks with Pakistan is expected to come within this week.

“I expect an agreement of the review to come within this week. So any day now,” said the global lender’s chief told Bloomberg on Wednesday while assuring the anchor that a deal was very “close”, as Pakistan inches closer to successful policy-level talks with the IMF.

“The Pakistani authorities and the minister of Finance deserve credit for, in a very difficult time, sticking to the programme that they had,” said the IMF chief.

She continued to say that the major issue in Pakistan was tax collection. “The country today collects 12% tax to GDP. We are saying [that] it has to be at least 15% to have the revenues, to sustain the functioning of your economy.”

“So, please, for the people in Pakistan that can pay taxes, collect it from them,” she added.

Meanwhile, officials privy to the ongoing talks between Pakistan and the IMF mission told Geo News, on the condition of anonymity, that Islamabad has agreed to impose a 40% windfall tax on the profits of the banking sector under the global lender’s conditions in a bid to secure the second tranche for the staff-level agreement under the $3 billion Standby Arrangement (SBA).

The IMF mission — led by Nathan Porter — and the Pakistani economic team have also completed discussions on all sectors, added the sources.

The Pakistani delegation was led by Caretaker Finance Minister Shamshad Akhtar and comprised State Bank of Pakistan (SBP) Governor Jameel Ahmad, Federal Board of Revenue (FBR) Chairman Malik Amjed Zubair Tiwan, and officials from the finance and energy ministries.

The sources further said that windfall taxes of up to Rs55 billion will be levied for the financial years 2021 and 2022. The taxes on the profits earned by the banks will be received in the month of December.

According to sources within the Finance Ministry, the Finance Bill does not require any amendments for the imposition of windfall tax on the banking sector.

“However, approval from the federal cabinet will have to be sought for the windfall tax,” added the sources.

Moreover, the IMF delegation and the economic team are likely to prepare the Memorandum of Economic and Financial Policies (MEFP) draft today, said the sources.

The parties have also agreed to not increase the interest rate further, added the Finance Ministry sources.

Business

E&P Companies Will Invest $5 Billion in Pakistan’s Petroleum Industry

Published

6 hours ago

Farwa

Over the next three years, local and foreign companies involved in Pakistan’s oil and gas exploration and production sector have shown a strong desire to invest more than $5 billion in the nation’s energy sector.

Recent changes to the Petroleum Policy and the implementation of an exclusive tight gas policy, which provide better incentives and a more investor-friendly regulatory framework, are credited with the increase in investor confidence.

These strategic changes are expected to boost domestic energy production, open up new avenues for growth, and draw large amounts of both domestic and foreign investment.

Business

With inflation slowing, the SBP is anticipated to lower the policy rate for the eighth time in a row.

Published

6 hours ago

Farwa

Businesspeople anticipate another reduction in the policy rate when the State Bank of Pakistan’s (SBP) Monetary Policy Committee (MPC) releases the updated rate.

The interest rate for the upcoming two months will be announced by the central bank. It is still unclear if the rate will stay the same or be lowered to reflect stakeholder expectations.

According to experts, the policy rate will be lowered in order to further boost the nation’s economic sector.

Interest rates may be lowered for the seventh time in a row if the inflation rate declines significantly more than anticipated.

In its last six sessions, the MPC had cut the policy rate by 10 percent. In January 2025, it decreased the rate by one percent to 12pc.

12PC POLICY RATE

In January, the State Bank of Pakistan (SBP) announced cut in key policy rate by 100 basis points (bps) to 12 percent from 13pc in line with expectations of the business community.

The policy rate, which had been at 22 percent since June 2024, was slashed by 1,000 basis points to 12 percent.

The SBP governor said the decision was taken with careful consideration. “Although inflation is expected to decline next month (February), core inflation remains a pressing concern,” he stated.

Ahmed highlighted strong remittance inflows and robust export growth as key factors supporting the current account.