The International Monetary Fund (IMF) on Wednesday emphasised renewed its condition of “removing fuel and energy subsidies” to achieve programme objectives.
Finance Minister Miftah Ismail had earlier this week said he would convey to the IMF that fuel and energy subsidies — which were introduced by the previous PTI government — could not be reversed as the “nation cannot endure it”.
But in a statement issued earlier today, the IMF said it had “emphasised the urgency of concrete policy actions, including in the context of removing fuel and energy subsidies and the FY2023 budget, to achieve program objectives”.
According to the IMF, the mission held “highly constructive discussions” with the Pakistani authorities aimed at reaching an agreement on policies and reforms that would lead to the conclusion of the pending seventh review of the authorities’ reform programme.
“In this regard, the further increase in policy rates implemented on May 23 was a welcome step. On the fiscal side, there have been deviations from the policies agreed upon in the last review, partly reflecting the fuel and power subsidies announced by the authorities in February.”
Meanwhile, Foreign Minister Bilawal Bhutto-Zardari said the ongoing bailout deal between Pakistan and the IMF was “outdated” given a number of global crises.
“This IMF deal is not based on ground realities, and the context has absolutely changed from the time that this deal was negotiated,” Bilawal told Reuters on the sidelines of the World Economic Forum.
He said it would be justified for Pakistan to plead this case before the IMF in [current talks].
“This deal is a pre-Covid deal. It is a pre-Afghanistan fallout deal. It is a pre-Ukrainian crisis deal. It is a pre-inflation deal,” FM Bilawal said.
Terming the deal “outdated” he said it would be unfair and unrealistic to expect a developing country like Pakistan to navigate geopolitical issues under the current agreements.
“We have to engage with the IMF and we have to keep Pakistan’s word to the international community … However, going forward, it is very legitimate for Pakistan to plead its case,” Bilawal said.
The newly-elected government began talks with the Fund a week ago over the release of a $1 billion tranche under an Extended Fund Facility, a process slowed by concerns about the pace of economic reforms in the country.
