The two sides are likely to reach agreement over the seventh review of the program, followed by the Fund releasing a $1.2-billion tranche
By Staff Reporter
ISLAMABAD: The International Monetary Fund (IMF) staff and Pakistanis officials will meet in Doha, Qatar on May 18 to restart talks over a stalled $6 billion program, senior officials said on Monday.
“IMF staff have told us us about the Doha venue and a tentative date, but the Fund is yet to convey the schedule officially,” a senior ministry official said. “We expect a meeting some time on 18 or 19 (May).”
The two sides are likely to reach agreement over the seventh review of the program, followed by the Fund releasing a $1.2-billion tranche. Pakistan will also seek an increase in the size and duration of the ongoing IMF facility.
The IMF previously also confirmed that Pakistan had requested to extend the EFF arrangement through June 2023 after talks in Washington, when officials agreed to drop energy subsidies. The official said Pakistan would explain IMF how and when they would withdraw fuel and electricity subsidy worth over $2 billion announced by the former prime minister Imran Khan.
Khan had announced a cut and a freeze on petrol and electricity prices till the new budget in June despite a steep rise in the global energy prices, days ahead of his ouster in a no-confidence vote by the joint opposition in the parliament.
The new government of Prime Minister Shehbaz Sharif had agreed to roll back unfunded subsidies to the oil and power sectors ahead of the resumption of talks. Later, however, the government maintained the subsidies for consumers, going against the understanding.
“Fuel subsidies and privitisation of state-owned enterprises are thorny issues, and will figure prominently at the talks,” the official said.
Pakistan is also wide of the mark in terms of current account deficit and budget deficit for the current fiscal year, both of which are ballooning to historic proportions.
Salvaging Pakistan’s beleaguered economy remains as one of the toughest challenges of the newly-elected government. Keeping the IMF program on track will require difficult decisions leading to higher inflation, the kind of decisions the current government, which is in power for a short period of time, would rather not take.
Apart from the direct monetary assistance it represents, the IMF program is also essential to maintaining Pakistan’s access to global financial markets. With a yawning current account deficit and foreign reserves falling to as low as $10.8 billion, Pakistan is in dire need of external finances.
The new government is also dealing with double-digit inflation, and slow growth of the economy, which the IMF said in its latest report was likely to stay at 4 percent against Pakistan’s earlier projection of 4.8 percent. The actual growth is likely to be even lower as the government has agreed to cut expenditures and development funding to secure the revival of the IMF program.
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