In an effort to break the deadlock, Prime Minister Shehbaz Sharif called International Monetary Fund Managing Director Kristalina Georgieva on Thursday and pleaded with her to loosen the terms pertaining to an increase in energy costs and the implementation of new taxes.
The phone call was conducted four days before the prime minister and IMF chief was scheduled to meet in person at the Geneva Conference to discuss securing a concession from the international lender.
According to sources, the PM encouraged the managing director of the IMF to reconsider the provision about the introduction of new taxes. In order to make up for the yearly circular debt management plan’s deviation of about Rs. 500 billion, he also asked for a waiver of the demand for price increases on energy.
These continue to be the key obstacles to coming to a preliminary agreement for an IMF staff visit to Pakistan. However, they continued, “the government was prepared to impose a flood tax and a windfall income tax on commercial banks.”
The Pakistani side has made a commitment to raise energy rates in the future to counteract any additional departure. It was unclear right away whether the IMF MD had made any compromises.
In the meantime, in an effort to prevent an imminent default, Prime Minister Shehbaz called his Chinese counterpart, Li Keqiang.
Gross official foreign exchange reserves for Pakistan decreased even more, to $5.6 billion. The prime minister’s call to the IMF head indicates that the finance ministry could not break the gridlock in the past three months.
Finance Minister Ishaq Dar had earlier voiced the prospect of securing a $3 billion second bailout from Saudi Arabia within days in what appeared to be an alternative to the IMF. He also pledged to raise money through the sale of assets to bolster the critically low foreign exchange reserves. However, because it cannot permanently fix the issue, the Saudi monetary help can only postpone the default.
The government is committed to the IMF program, according to the finance minister. He continued, “We will not adopt steps that may increase the burden on the average man,” while, at the same time.
The IMF had earlier asked for a plan to end the additional Rs500 billion circular debt, increase energy prices, imposition of new taxes, let the rupee gain its real value, and achieve the primary budget surplus targets, excluding flood-related expenses – the conditions that will stoke inflation that is already standing at 25 percent.
