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PM’s aide on Finance and Revenue Shaukat Tarin has denied that talks between Pakistan and the International Monetary Fund (IMF) for the resumption of $6 billion Extended Fund Facility (EFF) have failed, clarifying that negotiations were, in fact, headed in a positive direction.
It was earlier reported that Pakistan and IMF had again failed to reach a staff-level agreement at the scheduled time because of differences over the macroeconomic framework and deepening uncertainty over the future roadmap of the economy. As per the report, the talks failed despite Pakistan having implemented a prior condition of increasing electricity and petroleum products prices.
The ruling PTI has found itself left with no option but to go back to the IMF with a request for the resumption of the $6bn loan programme. The government was reluctant to introduce the unpopular measures suggested by the global lender. The strict programme conditions were also seen as major obstacles to the government’s plans to grow a shrinking economy.
Tarin in his talk with journalists, said that the government was working hard for an inclusive and sustainable economic growth that benefits all segments of the society “. At this stage, the PM’s adviser said, final details were being worked out and the negotiations would conclude successfully.
Asked whether the IMF was demanding for Pakistan to do more, the adviser said that every banker would ask for that when someone applies for a loan. The resumption of the IMF deal is crucial for Pakistan to sustain its external sector in the short to medium term since the growing trade gap is fuelling the current account deficit and bringing the already meagre foreign exchange reserves under massive stress.
However, it will increase more burdens on the people of Pakistan. Besides making electricity a lot more expensive, the IMF is likely to force Islamabad to implement measures to boost income and impose taxes to pull up its revenue target, abolish or significantly reduce all kinds of subsidies, and hike interest rates.
Neither the IMF nor the government has explained how most of the proposed reforms, which will further squeeze fixed-income households and put more pressure on taxpayers, will help the economy, and save lives and livelihoods. Therefore, both the government and the IMF are required to delineate a new approach to the reform agenda that appropriately appreciates the economic conditions obtaining in the country.