By Staff Reporter
ISLAMABAD Finance minister Ishaq Dar said Pakistan will cut farm and export subsidies and tackle the problem of circular debt as the cash-strapped country looks to bring back fiscal rectitude to convince the International Monetary Fund (IMF) to release overdue bailout payments.
Dar told a news conference in Islamabad that a detailed discussion had taken place with the IMF on the sidelines of a climate conference in Geneva, and the lender had emphasized “a need to take the fiscal measures”.
The country is in dire need of funds to cover its current account deficit and debt obligations. The country’s official foreign reserves have fallen to as low as $4.5 billion, barely enough to cover three weeks of imports.
Pakistan’s ninth review of staff-level talks with the IMF for the release of its next tranche has been delayed since September because of the inability of both sides to strike a consensus on a number of issues.
“They (IMF) think that we should take some fiscal measures, like if there are some un-budgeted subsidies,” Dar said. “We will achieve all our budgetary targets.,”
The minister said the IMF had taken up the subsidies in the export and farming sectors and the energy reforms. “We will do it but it wouldn’t burden any common man, it will be very targeted and categorical.”
Pakistan’s power regulator has already allowed Sui Northern Gas Pipeline Ltd (SNGPL) and Sui Southern Gas Company (SSGC) to hike rates up to 75 percent, which is subject to cabinet approval.
The country entered the $6 billion IMF programme in 2019, which was raised to $7 billion in 2022. The country will get $1.18 billion after the programme’s ninth review.
Project Loans
Minister Dar said nearly 90 percent of the pledges made by international donors to help Pakistan recover from last year’s flooding were project loans that will be rolled out over the next three years. He said these loans will be rolled out over the next three years.
More than $9 billion in pledges were made by the international community for the flood recovery at a climate conference in Geneva last Monday. Some 40 countries as well as private donors and international financial institutions had gathered for the daylong meeting, co-hosted by Pakistan and the United Nations.
The minister said project loan financing had already crossed $8 billion, including pledges by the Asian Development Bank, the Asian Infrastructure Investment Bank, and the World Bank.
“I am not incorporating the pledge made by the Saudi Development Bank on purpose here because it is not clear whether their announcement of $1 billion pertains to programme lending or project loan,” Dar said.
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