ISLAMABAD: Pakistan and the International Monetary Fund have failed to reach a staff level agreement for the revival of the $6 billion programme under External Financing Facility (EFF).
The talks held in Doha, Qatar, from 18-25th May. Finance Minister Miftah Ismail and IMF’s Mission Chief to Pakistan Nathan Porter led their respective delegations.
Pakistan failed to convince the IMF as both sides could not reach a staff-level agreement despite week-long negotiations.
In a handout, the IMF emphasised upon “urgency of concrete policy actions, including removing fuel and energy subsidies”.
The global financial institution emphasised the abolition of subsidies on petroleum products and electricity, among other conditions, as a prerequisite for the programme’s revival.
IMF Mission Chief for Pakistan Nathan Porter said they held constructive discussions with the Pakistani officials aimed at reaching an agreement on policies and reforms.
“Mission has held highly constructive discussions with 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 program, which is supported by an IMF Extended Fund Facility arrangement.”
Porter said considerable progress was made during the mission, including the need to continue to address high inflation and the elevated fiscal and current account deficits, while ensuring adequate protection for the most vulnerable.
The IMF also appreciated the State Bank of Pakistan’s (SBP) decision to hike the policy rate from 12.25% to 13.75%. He noted that on the fiscal side, there were deviations from the policies agreed upon in the last review, partly reflecting the fuel and power subsidies.
“The IMF team 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,” Porter said in the statement.
The mission chief added that the IMF team looks forward to continuing its dialogue and close engagement with Pakistan’s government on policies to ensure macroeconomic stability for the benefit of all of Pakistan’s citizens.
The PTI-led government had agreed on raising the price of electricity and petroleum products. In March, Imran Khan announced a subsidy on both commodities while the current government is continuing with the same arrangement.
This is the second time that Pakistan and the IMF have failed to reach a staff level agreement on the 7th review of the $6 billion Extended Fund Facility. The PTI government also tried to convince the IMF to release $1 billion loan tranche.
