Pakistan refuses to accept IMF’s terms for bailout

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Pakistan

ISLAMABAD: Finance Minister Asad Umar on Tuesday held a meeting with the visiting International Monetary Fund (IMF) mission led by Harald Finger in Islamabad.

While expressing concerns over the conditions put forward by IMF for the bailout package, Asad Umar clarified that Pakistan is not ready to accept them.

Sources said that the IMF demanded the government to increase General Sales Tax (GST) to 18 percent and also asked the government to withdraw subsidy in phases.

The mission also demanded the PTI government to increase interest rate more than 1 percent.

It asked the government to make State Bank, Oil and Gas Regulatory Authority (OGRA) and National Electric Power Regulatory Authority (NEPRA) independent.

The IMF further demanded the government to crackdown against tax evaders and also asked to slash line losses of the electricity.

On November 3, the government while bowing to the pressure of IMF had decided to withdraw Rs146 billion subsidy on power being given to the domestic consumers.

Sources told Dunya News that the government directed the distribution companies to chalk out a uniform power tariff for domestic consumers of different categories.

A petition seeking the determination of power tariff has also been sent to the National Electric Power Regulatory Authority (NEPRA).

Meanwhile, a team from the International Monetary Fund concluded its visit to Pakistan Tuesday, the government said, adding that “substantive progress” had been made but talks will continue on a possible bailout.

The IMF mission held “extensive talks” with Pakistani officials during the visit, which began on November 7, the finance ministry said in a statement.

“Substantive progress has been made by the government of Pakistan and the IMF Mission towards developing a common understanding on the policy and structural reforms framework for the prospective IMF programme,” the statement continued.

“The positive engagement with the IMF will continue over the coming weeks to finalize the programme with the Fund.”

Pakistan – which has gone to the IMF repeatedly since the late 1980s – is facing a widening balance of payments crisis.

But earlier this month finance minister Asad Umar said that unspecified assurances from China – combined with a pledge made by Saudi Arabia in October – meant that Pakistan’s immediate fiscal woes were “over”.

Riyadh pledged $6 billion in funding and struck a 12-month deal for a balance of payments lifeline during a visit by Prime Minister Imran Khan.

No further announcement has been made about any Chinese assistance.
Despite the pledges, Pakistan has said it will still seek broader IMF support for the government’s long-term economic planning.

In his statement, Umar said the reforms discussed included “fiscal and monetary measures, corrective interventions for balance of payments sustainability, pro-poor spending, governance and development of a business-friendly environment”. – NNI