ISLAMABAD: The International Monetary Fund will begin talks with Pakistani officials on Wednesday (today) over the release of crucial funds for the bailout package.
The talks will be held in the Qatari capital Doha, the finance ministry said, and are expected to continue into next week. A major sticking point is likely to be over costly subsidies notably for fuel and electricity. Finance Minister Miftah Ismail said he wants the two sides to “find a middle ground”.
Pakistan’s negotiating team will comprise the Ministry of Finance, Federal Board of Revenue, and State Bank of Pakistan, including Secretary Finance, Additional Secretary, Acting Governor SBP, and Deputy Governor, chairman FBR and Members IRS and Customs Policy Wings.
Pakistan has repeatedly sought international support for its economy, which has been hit by crippling national debt, galloping inflation and a plummeting rupee.
The $6 billion IMF bailout package signed by former prime minister Imran Khan in 2019 has never been fully implemented because his government reneged on agreements to cut or end some subsidies and to improve revenue and tax collection.
Islamabad has so far received $3 billion, with the programme due to end later this year. Officials are seeking an extension to the programme through to June 2023, as well as the release of the next tranche of $1 billion.
Prime Minister Shehbaz Sharif has vowed to jumpstart the moribund economy. Pakistan will have to convince the IMF to revive the stalled programme at a time when the government had not yet moved toward eliminating the fuel subsidies.
The government may offer to withdraw the fuel subsidy if it is able to strike a consensus among the coalition partners. The IMF is all set to ask policymakers for further tightening of fiscal and monetary policies and will recommend taking additional taxation measures in the upcoming budget.
The IMF has asked Islamabad to increase the FBR’s tax collection target of Rs7,255 billion for the next budget against the desired target of Rs6,100 billion for the current fiscal year. The global institution is also recommending further hiking the policy rate by 100 to 150 basis points in the coming monetary policy.
