Following the delay in the staff-level agreement with the International Monetary Fund (IMF), Pakistan has decided to seek US help for the revival of the stalled loan programme.
According to sources in the Finance Ministry involved with the development, the present government has decided to ask for assistance from Washington now that the majority of the fund’s requirements have been met. “The staff-level agreement does not require a further delay.”
They add that Ishaq Dar, the finance minister, will speak with the US representative this week. There is a likelihood that Pakistan and the IMF may reach a staff-level agreement this week, it has been claimed.
The virtual talks are also scheduled today with the International Monetary Fund.
Imran Khan creating hurdles in revival of IMF programme: PM
Officials from the State Bank of Pakistan and the IMF allegedly spoke on Thursday, according to additional sources. The points resolved in the Memorandum of Economic and Financial Policy were considered.
Before coming to a staff-level agreement for the $7 billion Extended Fund Facility (EFF), which had been stagnant for months, the International Monetary Fund (IMF) had asked Pakistan to implement requests.
One of the IMF’s requirements was completed when the State Bank of Pakistan (SBP) increased the monetary policy rate by 300 basis points to 20%.
“In spite of recent external and budgetary changes, this decision reflects a worsening in the inflation outlook and expectations. In order to keep inflation expectations in line with the medium-term target of 5-7 percent, the MPC believes that this outlook requires a robust policy response.
“MPC noted that reduction in CAD is important but requires concerted efforts to improve the external situation. It emphasized that any significant fiscal slippage would undermine monetary policy effectiveness in the context of achieving the price stability objective,” the SBP added.
Increase in power tariff
The government of Pakistan decided to raise energy prices for K-Electric (KE) customers and the agricultural community as another IMF precondition for the renewal of the $7 billion Extended Fund Facility (EFF).
Documents state that the introduction of a unified tariff will result in an average rise of Rs3.21 per unit in power prices.
Federal Govt jacks up power tariff for export industry
Residential customers who use more than 100 units would be taxed Rs1.49 per unit, while those who use 700 units will be charged Rs3.21 per unit. Additionally, the cost of electricity would go up by Rs4.45 per unit for industrial users and short-term residential customers.
Also, the government decided to raise consumer electricity prices by Rs. 1.55 every three months. Also, it has been decided to raise the quarterly rate for consumers starting in July 2022 and ending in September 2022.
To comply with International Monetary Fund (IMF) requirements, the federal government increased the power tariff for farm consumers and eliminated the Kissan package subsidies.
The subsidy given to agricultural consumers of Rs 3.60 per unit under the Kissan Package has been withdrawn. Agricultural consumers now have to pay Rs 16.60 per unit for power tariffs.