Finance Secretary Yousaf Khan along with his delegation has returned home after tough and prolonged talks with the officials of International Monetary Fund (IMF) in Washington which were aimed at securing the suspended tranche of $ 1 billion under the $ 6 billion Extended Fund Facility (EFF).
Whilst the Pakistani side appears to optimistic , the statement of the IMF will only clear the mist surrounding the loan program.
Sources in the Finance Ministry, nonetheless, told this correspondent that the international lender during talks in Washington set some conditions including imposition of additional taxes of Rs 500 billion by the government to get the next tranche of $ 1 billion.
The government has already approved hiking of the power tariff by Rs1.39 per unit, the Fund has assessed that Pakistan should increase the price by Rs 30 per unit to better deal with chronic issues in the energy sector especially that of the circular debt. Besides, the fund has demanded Pakistan to increase the prices of petroleum products by additional Rs 10 per liter. The IMF also wants Pakistan to withdraw all sorts of subsidies. This has come at a time when the government is seriously considering to launch a targeted subsidy program for the marginalized segments of the society to provide essential commodities such as flour, sugar and pulses on subsidized rates. On the privatization front, the IMF wants to Pakistan sell out of loss-making entities including DISCOs.
The Finance Ministry sources said that the government has agreed to the IMF conditions but has sought time by June next year to fulfill them in phased and gradual manner. They said that Pakistani delegation during talks with the IMF insisted that our people are already faced with difficult situation due to soaring prices of essential commodities. Hence, it is not immediately possible to further burden them with increase in electricity prices and withdrawal of subsidies. They said decision rests with the IMF as to how it proceeds further. Pakistan and the IMF had signed the $ 6 billion deal in July 2019 but the program was derailed in January 2020 and restored briefly in March this year before again going off in June.
