The International Monetary Fund (IMF) is holding open, constructive discussions with Pakistan as part of a sixth review of the country’s 39-month, $6 billion financing programme that began in 2019, IMF spokesman Gerry Rice said on Thursday.
Rice declined to say if disbursements under that programme had been halted but said further discussions were needed about Pakistan’s fiscal spending plans, structural reforms, particularly in the tax and energy sectors, and social spending.
IMF staff were unable to complete the talks during a recent mission, but the global lender remained “fully engaged” and aimed to resume the discussions in the period ahead, Rice told a regular IMF briefing.
“We stand ready to continue to support Pakistan,” he said. “As the recovery gains strength, it will be important to accelerate the implementation of policies and reforms needed to address some of the long-standing challenges facing the Pakistani economy.”
Pakistan this month set a target of 4.8 per cent growth in gross domestic product for the 2021-22 financial year and a fiscal deficit target of 6.3pc.
The country surpassed growth projections in the 2020-21 financial year despite a third wave of Covid-19 infections, reaching GDP growth of 3.96pc, after a 0.47pc contraction in 2019-20.
Earlier this month, Finance Minister Shaukat Tarin had said it was not possible for Pakistan to get out of the IMF programme at a time when the economy is reviving.
“It is not possible to get out of the IMF programme at this time,” Tarin had said, adding: “We were forced to go to the IMF.”
“This time the IMF was not friendly with us and the programme was front-loaded and tough,” he further said, comparing the current programme to previous ones with the lender.
He said that the power sector measures would be sustainable and will increase revenue. “This is what IMF wants from Pakistan,” he had remarked.
‘HIKE POWER AND GAS TARIFF’:
The IMF asked Pakistan to increase power and gas tariffs as it wants the government to collect Rs150 billion more under the head of personal income tax, Finance Minister Shaukat Tarin told National Assembly Standing Committee on Finance on Thursday.
Tarin said that in the first phase, the IMF proposed an immediate tariff hike of Rs1.39 in electricity prices while in the second phase, the fund proposed a hike of Rs4.95 in the power tariff — a total increase of Rs6.34. The IMF has been demanding an increase in the power tariffs to curtain the circular debt that has reached Rs2,500 billion owing to power losses due to the poor transmission system and theft.
During a meeting of the NA body chaired by ruling PTI’s Faizullah Kamoka, Tarin said that the IMF also wanted the government to increase the gas tariff.
Tarin told the NA committee that a meeting was held with the Fund officials on Wednesday, during which it was relayed to the international money lender that an increase in power and gas tariff will hurt Pakistan’s industrial growth.
According to Tarin, the IMF executive body will meet in September to approve Pakistan’s case. He added that the meeting was supposed to take place in on July5-7, but now it will be held in September. He further said that till Septemeber, the Fund will monitor Pakistan’s performance and added that both IMF and the government wanted a stable economic outlook. The finance minister said that the government will issue Sukuk and green bonds to boost its dollar reserves.
On June 15, it was reported that the burden on the public would likely increase in the next financial year owing to a potential increase in electricity and gas tariffs by October this year. The increase, however gradual, will be made on the demand of the IMF as an attempt to break the deadlock between Pakistan and IMF on the issue.