ISLAMABAD:
Pakistan and the International Monetary Fund (IMF) have agreed in principle to prolong the stalled rescue program by up to one year and increase the loan to $8 billion, giving the markets much-needed stability and breathing room. space to new government.
An understanding was reached between Finance Minister Dr. Miftah Ismail and IMF Deputy Managing Director Antoinette Sayet. in Washington, sources told The Express Tribune. on Sunday.
With considering final conditions, the IMF agreed that the program would extended nine months before one year as against in original end of period of September 2022, sources added.
The size of the loan will be increased from the existing $6 billion to $8 billion – net addition of 2 billion dollars and senior government said the official, who wished to remain anonymous. The IMF is expected issue statement on Monday (today) in in this respect.
Previous led by PTI government and the IMF signed an extended financing agreement for 39 months (from July 2019 to September 2022). with a total value of 6 billion dollars. However, the previous government failed fulfill its obligations, and the program stalled for most of a time when $3 billion remained unspent.
Also read: The IMF is tough terms for salvation revival
Before referring the case of Pakistan to the Board of the IMF for assertions, Islamabad will have to agree on in budget strategy for in next fiscal year 2022-23, the sources said.
Same way government of Prime Minister Shehbaz Sharif will have to demonstrate that this will undo some wrong steps accepted former mode against commitments he made to the Board of Directors of the IMF in January this year.
Pakistan passes through phase of political and economic uncertainty and decision stay in IMF program for longer than original period will bring clarity in economic policy and calm shaky markets.
Minister of State for Finance Dr. Aisha Ghaus Pasha, outgoing Governor of the State Bank Dr. Reza Bakir, Minister of Finance Hamid Yacoub Sheikh and Pakistan Executive Director at the World Bank Navid Kamran Baloch also participated in meeting with IMF team.
Names of banker and former bureaucrat, who It has also served in Asian Development Bank, under consideration for Replacing Dr. Bakir. Bakir is going complete his term on May 4th.
To give a final shape to extended program, IMF mission According to sources, he will visit Pakistan, probably from May 10.
IMF team will be led by new mission chief, Nathan Porter.
Good meeting between Deputy Managing Director Antoinette Sayeh and Finance Minister of Pakistan @MiftahIsmail on the policies required to continue the operation of the Expanded Funding Facility program.
BUT mission expected visit to Islamabad in You can continue the discussion.— Jerry Rice (@IMFSpeakesperson) April 24, 2022
About a successful conclusion of negotiations, it was expected that both sides would come to an agreement at the staff level, senior Ministry of Finance official said.
Technical staff of Pakistan and the IMF start engagement from monday to see budget position in light of “irresponsible” decisions made previous government.
However, before formal approval by the IMF for increasing the size of the program and cash limit, i.e. government have to show that it’s sincere in make the necessary tough policy decisions.
Sources said the IMF has asked Pakistan to withdraw fuel and electricity subsidies that former Prime Minister Imran Khan announced on 28th of February in “total ignore for fiscal prudence” and “receive the lost support” due to double-digit inflation in the country.
This was stated by the Minister of Finance Ismail. last week that government gave a subsidy of 21 rubles per liter on gasoline and 51.54 rupees per liter on high-speed diesel it in month of April only cost taxpayers 68 billion rupees.
These subsidies must be withdrawn in order to revive the program.
last PTI government appreciated cost of fuel subsidies of 140 billion rupees for March 1st to June 30th year. However, so far government It has already gave 101 billion rupees in two months.
Also read: The government is ready to limit fuel subsidies, said Mifta IMF
The oil division calculated that another 192 billion rupees would be needed to pay. for fuel subsidies in May-June, according to the summary of the Ministry of Energy for Economic Coordinating Committee (ECC).
Sources said he also both parties agreed that IMF staff would review the actual financial figures of current fiscal year as against goals agreed with in global creditor in December 2021.
Former finance minister Shaukat Taryn agreed with IMF that he ensure primary budget addition to the melody of 25 billion rupees. Now, however, the Treasury Department has calculated that there could be a primary deficit. of 1.3 trillion rupees by the end of June, according to the Myth.
IMF wanted Pakistan to minimize rejection against previously agreed limit of According to sources, the surplus is 25 billion rupees.
global creditor also wanted to new government should Try to do up for some of subsidy and deviance, they added.
Said during the discussion with IMF, issue of Pakistan debt sustainability, import reduction, growth current account deficit and an increase in foreign exchange reserves were also discussed.
Away, Mifta also held meetings with World Bank, Governor director.
It was also World Bank Vice President Hartwig Schafer and Navid Kamran Baloch were in attendance.
The parties discussed the possibility of unlocking about $1.8 billion WB loan, which is also stuck up as of or lack of execution of actions promised last government or because of bureaucratic snags, sources added.
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