IMF hands over wish list for progress on loan programme
File photo: IMF Resident Representative in Pakistan, Esther Pérez Ruiz

As the latest government figures show a huge increase in borrowing this fiscal year, reports have emerged about the IMF sharing a list of prerequisite actions which require Pakistan to implement the same during the next three weeks.

The wish list – which can also be described as demands of conditions – are said to be essential for any movement in reviving the stalled loan programme – an obstacle that is keeping the local financial market and overall economic environment in a cliffhanger-like status.

It is only by executing these demands that Pakistan can expect for a staff-level agreement and releasing of $1 billion tranche under the Extended Fund Facility (EFF) – a move necessary for receiving any assistance of countries like Saudi Arabia as well as other international donor agencies.

Finance Minister Ishaq Dar is expected to hold consultations with his core economic team in a couple of days for evolving consensus on required actions to be taken in the coming few weeks.

On Thursday, Pakistan and the IMF officials held another round of virtual talks, where Dar assured the IMF that Islamabad Pakistan was expecting to receive inflows from a friendly country within a week or two.

Earlier this week, it had emerged that the IMF wants Pakistan to pass on Rs65 billion to the electricity consumers – an amount related to the deferred Fuel Price Adjustment (FPA) during the summers this year.

According to reports, the government has agreed to charge the power consumers to recover Rs55 billion. However, the remaining Rs10 billion would be absorbed through the allocation of subsidy.

It is estimated that the power sector’s accumulated losses might climb up to Rs1,734 billion for the current fiscal year if there is no policy change or “reforms” – a word synonym to increased tariffs in Pakistan, but actually it results in jumping theft in this sector.

That’s why sources now say that the finance ministry asked their counterparts dealing with the matters related to energy to revise the roadmap for trimming the Circular Debt Management Plan (CDMP) for 2023.

However, the IMF has agreed to allow adjustment of Rs340 billion for hiking the budget deficit because of flood-related expenditures in the current fiscal year, but it is adamant on pressing for additional measures to bridge the gap for materializing the FBR’s envisaged revenue target.

High rate of borrowing

Pakistan borrowed around $5.115 billion in foreign loans in the first five months (July-November) of the current fiscal year – an amount around 14 percent higher than the foreign loans received in the comparable period last year.

In its monthly report on Foreign Economic Assistance (FEA), the Ministry of Economic Affairs says it has received about $5.115 billion foreign assistance so far (July-Nov) compared to $4.499 billion compared to the same period last year.

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