WASHINGTON: Federal Minister for Finance and Revenue Miftah Ismail has agreed with IMF recommendations to reduce fuel subsidies.
Pakistan s new finance minister on Friday agreed with IMF recommendations to reduce fuel subsidies, pledging to pursue structural reforms to boost a crisis-wracked economy.
The International Monetary Fund in 2019 approved a $6 billion loan over three years for Pakistan but disbursement has been slowed down by concerns on the pace of reforms.
Finance Minister Miftah Ismail, who took office this month after a previous government lost a no-confidence vote, said he had “good discussions” with the IMF on a visit during the Washington-based lender s annual spring meetings.
“They ve talked about removing the subsidy on fuel. I agree with them,” Ismail, himself a former International Monetary Fund economist, said at the Atlantic Council.
“We can t afford to do the subsidies that we re doing. So we re going to have to curtail this,” he said.
He said that former prime minister Imran Khan set a “trap” for his successors through heavy subsidies on fuel.
Ismail, however, said that some targeted subsidies should remain for Pakistan s poorest amid sky-high global prices.
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Pakistan s new Prime Minister Shehbaz Sharif has vowed to jumpstart a moribund economy, certain to be a major issue in elections due by late next year.
Pakistan has repeatedly sought international support and suffers from a chronically weak tax base.
Ismail said that Pakistan, the world s fifth most populous nation, needed to move to a new economic model by removing obstacles and promoting exports to the world.
“We have such an elite-benefitting country that almost every subsidy that you can speak of actually goes to the richest people,” he said.
