Lender’s country rep says ‘they were not consulted’ on planned petrol subsidy
ISLAMABAD
The International Monetary Fund (IMF) said Pakistan has made “substantial progress” toward meeting policy commitments needed to unlock billions of dollars in loans the country needs to avoid a default but “few remaining points are yet to be finalized”, Bloomberg.com reported Tuesday.
Pakistan has taken tough measures including increasing taxes and energy prices, and allowing its currency to weaken to restart a $6.5 billion IMF loan package. The funds will offer some relief to a country still reeling from last year’s devastating floods and help pull the economy out of a crisis ahead of elections this year.
“A staff-level agreement will follow once the few remaining points are closed,” said Esther Perez Ruiz, the IMF’s resident representative for Pakistan, adding “Ensuring there is sufficient financing to support the authorities in the implementation of their policy agenda is the paramount priority.”
Finance Minister Ishaq Dar said last week that the IMF wanted to see countries finalize commitments they’ve made to help Pakistan shore up its funds before signing off on the bailout package. Pakistan needs to repay about $3 billion of debt by June, while $4 billion is expected to be rolled over.
In a statement, Ruiz said the lender wasn’t consulted on the government’s plan to raise fuel prices for wealthier motorists to finance a subsidy for lower-income people. IMF staff are seeking more information about the scheme’s operations, costs, targeting, fraud and abuse protection, and offsetting measures.
“Fund staff are seeking greater details on the scheme in terms of its operation, cost, targeting, protections against fraud and abuse, and offsetting measures, and will carefully discuss these elements with the authorities,” she said while talking to Bloomberg.
Esther Perez said that significant progress has been made in discussions with Pakistan toward policies that related to the ninth Extended Fund Facility (EFF). “Fund staff are seeking greater details on the scheme in terms of its operation, cost, targeting, protections against fraud and abuse, and offsetting measures, and will carefully discuss these elements with the authorities,” she said.
The IMF spokeswoman said that the discussions about the policies with the Pakistani authorities recently are fruitful, adding that the secure funding to support the implementation of the policy agenda is a top priority. “There will be a staff level agreement after some remaining points are met,” Parez said.
Esther Perez Ruiz said that Pakistan has made a lot of progress in fulfilling the commitments made with the IMF. EFF is a financial arrangement between the IMF and a member country, providing economic support and policy guidance over an extended period. The ninth EFF review for Pakistan is of particular significance as it will determine the release of the next tranche of funding.
Earlier in the day, the IMF has raised reservations on the petrol subsidy scheme announced by Prime Minister Shehbaz Sharif. International Monetary Fund (IMF) resident representative Esther Pérez Ruiz has the government of Pakistan has not consulted with the fund on the petrol subsidy scheme.
“The IMF is seeking more details about the scheme from Pakistan.” Esther Pérez Ruiz said the IMF has already rejected unfunded and untargeted subsidies. The IMF official said Pakistan has made much progress in the revival of the stalled loan programme. Ruiz emphasized that securing adequate financing to support Pakistan’s policy agenda was the top priority.
