ISLAMABAD: The sixth economic review talks between Pakistan and the International Monetary Fund (IMF) have ended without any agreement; as a result, the next loan installment to Pakistan will be delayed.
Federal Minister for Finance and Revenue Shaukat Tarin categorically said that the government will not put an additional burden on the poor segments of society by raising taxes on power and gas tariffs. The FM said that the talks with the IMF will bore results eventually as the fund will review Pakistan’s progress in September this year.
According to the finance minister, Pakistan has provided IMF with an alternate plan to increase revenue generation and it will be implemented thoroughly to meet the revenue target set by the IMF. According to Tarin, the IMF will monitor Pakistan’s progress for the next three months to make its decision in the next quarterly review.
The statement of the minister came a day after reports that claim a hike in power, fuel, and gas tariff by the end of the first quarter of the upcoming financial year. According to sources in the Finance Ministry, the government will likely raise electricity and gas tariffs by October on the demand of the fund. The hike in these prices, however, will be gradual, they added.
Currently, there is a deadlock between IMF and Pakistan government over power tariffs. The Fund wants the government to increase the electricity prices, but the finance minister has urged IMF to review its decision as any further increase in the power tariff will have an adverse impact on the economic growth.
Sources in the Finance Ministry said the government will have to hike the power tariff to arrest the budget deficit as it is expected to rise to another $2 billion in the next financial year.
Moreover, if negotiations fail with the IMF, international institutions like World Bank and the Asian Development Bank (ADB) will stop loan payments to Pakistan.