Prime Minister Shehbaz Sharif Thursday promised that he would soon share with the nation the details about the former ruling party’s deal with the International Monetary Fund (IMF).
His message on Twitter comes a day after the government raised the fuel price, with petrol reaching Rs233.89 per litre.
“Acutely aware of the impact that a fuel price hike causes. Govt is left with no choice but to raise the prices due to IMF deal that PTI govt signed. Will take the nation into confidence on the specifics of the IMF-PTI deal soon,” wrote the prime minister.
“We will get out of these economic difficulties, InshaAllah,” he added.
“I wonder whether those who struck the worst ever deal with IMF and took patently bad economic decisions have the conscience to face the truth. How can they pretend to be innocent when what the nation is going through is clearly their doing?”
“Details soon,” he reiterated.
The surge in prices, although a highly unpopular move, had been a key demand of the IMF for a long time. Finance Minister Miftah Ismail Monday said if the government did not abolish subsidies on the petroleum products by July (in effect raising the prices), then the country will default.
Speaking to a news channel, he said the IMF had insisted on abolishing the subsidies on petroleum products. In a bid to bring economic stability and revive the stalled multi-billion-dollar IMF programme, the government increased the price of petrol by a whopping Rs60 per litre last month. Pakistan had signed a 39-month, $6 billion Extended Fund Facility with the IMF in July 2019.
It received disbursements of about $3bn but further tranches were stopped when an agreement could not be reached with the previous government. The lender had expressed concerns over the status of some of its objectives, including fiscal consolidation.
IMF’s resident representative on Monday said that additional measures will be needed to bring Pakistan’s budget FY2022-23 in line with the key objectives of its program.
The next tranche that Pakistan is to receive upon a successful review is $900 million, and a green light from the IMF would also open up other global funding avenues. Pakistan urgently needs funds in the face of dwindling foreign exchange reserves, which have reached $9.2 billion – enough for less than 45 days of imports. Pakistan unveiled a Rs9.5 trillion budget for 2022-23 on Friday, aimed at tight fiscal consolidation in a bid to convince the IMF to restart the much-needed bailout payments.
“Our preliminary estimate is that additional measures will be needed to strengthen the budget and bring it in line with key program objectives,” Esther Perez Ruiz told a UK-based international wire agency.
Finance Minister Miftah Ismail told this agency on Saturday that the IMF had expressed concerns about the budget numbers, including fuel subsidies, a widening current account deficit, and the need to raise more direct taxes.
He, however, added that his government was confident they could adjust the budget to bring the IMF on board and was hopeful of securing a successful review this month.
“Discussions with the authorities continue to obtain more clarity on certain revenue and spending items and allow for a full assessment,” Ruiz said.
She said the fund was ready to continue to support the authorities’ efforts and in the implementation of policies to promote macroeconomic stability.
Meanwhile, PTI leaders rejected the price hike and accused the government of being “a hypocrite”. Former finance minister Shaukat Tarin warned that the price hike would push inflation “over 30 per cent” and would “crush” middle to lower income groups. PTI General Secretary Asad Umar likened the “imported government” to “robbers”.
“Just like robbers enter a house in the dark of night, the imported government too plunders the pockets of the petrol via petrol and diesel prices in the dark of night.”
Ex-minister Farrukh Habib described the petrol price hike as a “suicide attack” on the people of Pakistan. “This imported government is not buying petrol from Russia, the cost of which is being paid by the public,” he added.
Habib’s party leader Imran Khan, has on multiple occasions claimed that Pakistan was poised to purchase discounted oil from Russia but his government was forced out in the vote of no confidence. He has praised India’s “independent foreign policy” for buying Russian crude. The current government insists there was no such agreement in the works.
Meanwhile, Senator Faisal Javed stressed the need to reach out to the public. “It seems as if this is the last month of the incumbent government. Elections have become inevitable now. To protect (the country) from inflation and destruction, it is important to reach out to the public. Inflation can only be controlled when a government, which has full confidence from the people, is elected. Immediately dissolve assembles, call fresh elections and see how economic indicators improve,” Javed suggested.
