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ISLAMABAD: Finance Minister Ishaq Dar is set to travel to Washington next week to formally request International Monetary Fund (IMF) to give concessions on loan conditions.
“Pakistan’s Minister for Finance Ishaq Dar will participate in the upcoming annual meeting of the IMF and World Bank,” a top official of the Finance Ministry was quoted as saying in The News on Wednesday.
Last week, the federal government unexpectedly cut the price of petroleum goods, prompting discussion on whether the action is consistent with the IMF agreement and former minister Miftah Ismail termed the action as “reckless.”
Dar, in contrast, countered his predecessor by asserting that he is familiar with dealing with the IMF, and state minister for finance Aisha Ghous Pasha added that the announcement did not go against the terms of the loan.
Moreover, the IMF has stated that the Pakistani government’s policy pledges established as part of the support program’s seventh and eighth evaluations still stand.
According to a report in The News, which cited unnamed sources, Pakistan will formally ask the IMF’s senior officials to change the macroeconomic framework for the current fiscal year 2022–2023 by lowering GDP growth, raising inflation, and increasing the twin deficits of the budget deficit and current account deficit.
Islamabad is prepared to ask the IMF to relax the conditions of the Extended Fund Facility (EFF), particularly by freezing the fuel price adjustment for electricity and the petroleum development levy on POL products for the upcoming few months in order to provide some relief to the people suffering from inflation.
The report said, Pakistan will also ask to have the budget deficit goal for the current fiscal year relaxed since catastrophic flooding could jeopardize its efforts to raise money and put further strain on its ability to control spending.
According to the IMF program, the government has set a budget deficit target for the current fiscal year of 4.9% and is projecting a revenue surplus of Rs153 billion through the end of June 2023.
In the wake of devastating floods that have necessitated over $30 billion in construction costs for Pakistan’s faltering economy, a request for a revision of the macroeconomic framework will be made for the current fiscal year.
In accordance with the macroeconomic framework, the government has estimated that, as opposed to the earlier anticipated aim of 5%, the country’s GDP growth may hover around 2% for the current fiscal year.
For the current fiscal year, the economic loss has been estimated at Rs2.4 trillion. According to government forecasts, 1.8 to 2 million jobs will be lost, leading to an increase in unemployment, and poverty may rise by 4.5 to 5%, putting 9 to 12 million people below the poverty line.
