By Staff Reporter
ISLAMABAD: The government is well-positioned to cut a staff-level deal with the IMF next month, the country’s finance boss said on Saturday, making a headway toward reclaiming a nearly lost loan.
The loan resumption bets got a mighty boost after the new government, delivering on the IMF’s top condition, started rolling back fuel and power subsidies to avoid a default.
“The funds [under the EFF (Extended Fund Facility (EFF)] would be released after the final approval by the IMF’s executive board,” said Ismail, addressing a press conference with Ayesha Ghous Pasha, Minister of State for Finance.
“Pakistan has requested the fund [that is yet to release the rest of $3 billion out of $6 billion loan] to extend the programme by one year and provide an additional $2 billion.”
He said if the multilateral lender agreed to lend the additional amount, the country was expected to receive around $5 billion in total.
“The IMF programme is important not just because we’d get funds through it, it is critical because it opens the gateway to funding from other international financial institutions.”
The finance minister said once the IMF released the latest tranche, funds would also start flowing into the country from multilateral organisations. As much as $8.9 billion was on the way, the finance minister said.
He said an increase in the fuel prices would definitely mount inflationary pressures, but not reversing the subsidies would have bankrupted the country.
The onus would have been on the government, and the rupee would have devalued further, he said.
“My hands are tied because of the agreement signed by the PTI government with the IMF and under their agreed formula the petrol price is to go up to Rs257/litre and diesel Rs300/ litre.”
Ismail said the government would not charge tax and petroleum levy on oil products.
On the possibility of further hike in petroleum prices from June 1, 2022, the finance minister said he had no update on it; however, he did say that it would be inappropriate to increase fuel prices so frequently and so fast.
“The OGRA will forward its summary and the decision will be taken by the PM,” he added.
He said the government took the tough decision in the larger interest of the country knowing full well the risks it posed to their political capital.
Rupee and stocks rebounded after the move.
The finance minister said Saudi Arabia had recently confirmed Riyadh would roll over $3 billion deposits to Pakistan, which would become due in December 2022.
He said the government would try with all it’s worth to dish out maximum relief to the underprivileged population.
“We have decided to provide a monthly stipend of Rs2,000 to 14 million households.
The minister said the ‘Sasta Petrol and Sasta Diesel’ scheme would provide relief to around one-third of the country’s population by extending cash stipends to the poor families.
The government would start paying this inflation allowance from June, spending a total Rs28 billion/month.
He said around 7.3 million deserving receivers were registered with Benazir Income Support Program (BISP).
“The BISP beneficiaries will also be provided immediate relief of additional Rs2,000/family.
He said the unregistered women heads of those households can get registered by texting their CNIC number to 786.
“The households earning less than Rs40,000 are eligible for the relief,” Ismail said, adding the scheme would be a part of the federal budget 2022-23, while funding for BISP would also be increased in the budget.
To a question on privatisation, the minister said neither side brought up the privatisation subject in the recent IMF talks.
“However, the country will have to privatise certain entities, including Discos and power companies as they were draining the national kitty,” the finance minister added.
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