Pakistan and the International Monetary Fund (IMF) Tuesday have begun talks on a ninth review of the $7 billion Extended Fund Facility (EFF).
Nathen Porter, the head of the IMF mission, was welcomed at the finance ministry by Ishaq Dar, the minister of finance. The Pakistani group attending the IMF negotiations includes Tariq Pasha, SAPMs Ayesha Ghous Bux, Secretary Finance Hamid Yakoob, and Tariq.
The second phase of policy negotiations will continue through Feb. 9 to finalize a memorandum of economic and financial policies. Technical-level discussions will continue through this coming Friday, Feb. 3. (MEFP).
Before the talks, the federal government had already complied with two of the lender’s key requirements, including permitting the rupee to be adjusted against the dollar and a rise in oil prices.
The action was taken in response to Prime Minister Shehbaz Sharif’s statement that the coalition administration intends to finish the ninth review as soon as possible.
“I have told the IMF chief executive that Pakistan is willing to complete the pending review and incorporate the conditions raised by it,” he had said.
IMF disbursements was stopped in November as a result of Pakistan’s failure to achieve further progress on fiscal reduction and economic reforms. Pakistan had secured a $6 billion bailout in 2019, which was supplemented with an additional $1 billion last year.
IMF’s list of prerequisite actions
The IMF has asked that Pakistan take all required steps to enable the signature of a staff-level agreement and the release of a $1 billion tranche under the Extended Fund Facility (EFF).
According to the sources, the IMF has asked Pakistan for a plan for collecting Rs 855 through a gasoline charge till June 30, 2023. The charge on diesel must be increased by Rs 15 per litre by the Pakistani government, bringing it to Rs 50 per litre.
According to the sources, the IMF has also requested payment of the circular debt in the gas industry in order to restart the halted loan programme. The sources further stated that Pakistan must raise gas prices by up to 74% in order to pay off the debt.
‘Mini budget’: Govt likely to impose additional duty on luxury goods
Pakistan has also been directed to take action to increase tax revenue by Rs300 billion and raise the basic electricity rate. The IMF wants Pakistan to lift the “artificial ban” on the dollar exchange rate, it has also been learned.