Minister of Finance Miftah Ismail on Wednesday told the International Monetary Fund (IMF) that government understood current economic crisis and agreed that he would have to take “tough decisions”while mitigating of inflation on middle and low income groups.
Earlier today government started negotiations with Fund over release of tranche of US$1 billion under the Enhanced Funding Facility, progress has been slowed down by concerns about pace of economic reforms in the country. Negotiations are underway in capital of Qatar Doha, ministry of Finance said and is expected to continue in next week.
However, finance ministerminister of State Dr. Aisha Gous Pasha, Financial Secretary Hamed Yacoub Sheikh, State Bank of Pakistan (SBP) Acting Governor Dr. Murtaza Syed, Federal Council of Revenue Division (FBR) Chairman Asim Ahmad and other Finance Division officials attended in negotiations virtually.
According to the information leaflet issued later in day by the Finance Department, Ismail reaffirmed the government’s commitment to Russia to implement the reforms envisaged by the program, and complete structural guidelines.
“IMF mission chief, Nathan Porter, shared with in minister for finance and income IMF estimate of in challenges facing in economy. He understood that Pakistan economy demanded both immediate and long term measures.
According to the statement, Ismail stated that some of factors that had a negative impact on the economic situation “were out of control of in government”.
“These include exogenous factors like supply shocks, commodity super cycle and [the] The Russian-Ukrainian conflict, which caused commodity prices to soar even more. These factors put pressure on [the] current accounts, as well as foreign exchange reserves, added.
Ismail also said that government would take action reduce burden on in economy protecting vulnerable areas of in population. He added that Pakistan should aims to solve structural problems so that the country can do away with budget deficits and move towards sustainable growth.
Finance minister thanked Porter for funds support at a difficult time for in global economy and both sides showed great interest in complete in review successfully- the statement says.
Financial department also said that Ismail and Pasha would joining in team in Doha early next a week to complete the discussion with “waiting for an agreement for the IMF continued supportuntil successful completion of program.
$6 billion in IMF assistance package signed former prime minister Imran Khan in 2019 was never fully realized because its government refused on agreements to reduce or eliminate certain subsidies and improve revenue collection and taxes.
Islamabad has already received $3 billion, with the program must end later than this year. Officials are seeking an extension of the program until June 2023, as well as the release of in next tranche of 1 billion dollars
Prime Minister Shahbaz Sharif vowed to kick-start a moribund economy, but analysts say it is fragile government It has failed take it hard decisions.
In recent meetings with in new finance ministerIMF tied continuation of credit program with appeal of fuel subsidies that were introduced by the previous government. However, Prime Minister Shehbaz has several times rejected the Oil and Gas Regulatory Office and the Treasury Department’s summary of fuel price hikes.
“This is an administration that refused to accept hard political steps to bring possible economic relief — but that is exactly the sacrifice she must make by turning to the IMF,” said Michael Kugelman, MP for South Asia. director at the Wilson Center in Washington.
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