Pakistan has reportedly succumbed to the International Monetary Fund (IMF) pressure and accepted most of its conditions.
According to a report, the impression that talks with IMF have failed is incorrect. Islamabad has actually “agreed” to comply with the IMF’s new conditions, including an increase in tax revenue, and ensure the implementation of a privatisation programme to secure the donor’s loan programme.
“The IMF suggested that we review our economic targets and comply with conditions related to the power sector reforms,” insiders in the ministry of finance said.
The report said that the IMF has rejected the ministry’s plan and its board will announce the final decision regarding the resumption of loan programme.
However, the ministry has also said that Pakistan has accepted the IMF’s new conditions and any reports of failure are “premature” at this stage.
Finance Ministry spokesperson Muzzammil Aslam said in a tweet on Saturday that Pakistan will have to ensure the implementation of a privatisation programme to secure the IMF loan programme.
The spokesperson said dialogue with the IMF team is still underway, adding that a formal announcement on it will be issued as soon as talks conclude.
He said Pakistan will have to comply with the IMF’s new conditions if it wants the loan programme to be restored. “The IMF suggested that we review our economic targets and comply with conditions related to the power sector reforms,” he added.
The government will have to take measures to increase tax revenue, he said, adding that the IMF has rejected the ministry’s plan and imposed conditions that would see an increase in interest rates and fixing the market rate of the dollar. The IMF board will make the final announcement regarding the loan program, added the spokesperson.
The statement came after local media reported that Pakistan and the IMF have failed to finalise the Memorandum of Economic and Financial Policies (MEFP) that would have concluded the Sixth Review under a $6 billion Extended Fund Facility (EFF).
The government had found itself in a very tough situation with respect to the international money lender’s demands. There are risks attached for Pakistan either with or without the IMF loans.
Earlier on Monday, it was reported that a deadlock had persisted between Pakistan and the IMF as the global lender had put forward harsh conditions for the release of stalled loan, asking Islamabad to undo unnecessary tax holiday facility and raise the tax collection to Rs6,000 billion.
It was also reported that the talks between the IMF and Pakistan were not going in a smooth way as the Fund had asked for the abolition of unnecessary tax holidays and imposed a condition to raise tax revenue to Rs6 trillion.
The technical teams of both sides had failed to build consensus on gas and electricity prices.
