ISLAMABAD - The first round of policy level talks between Pakistan and IMF remained inconclusive on Monday, as both the sides stuck to their positions regarding conditions for a new loan programme.

Finance Minister Ishaq Dar Monday reiterated that government would not impose any new tax for fresh IMF programme and he vowed not to let Pakistan go default.

Talking to the media after attending long talks, the finance minister said the country would take new programme on its own terms. Pakistan is member of International Monetary Fund (IMF) and “we are not begging” from anyone, he declared.

Dar said that Pakistan would not default and “talking loan is one of available option for us”. “We have to plan wisely regarding giving subsidy to the power sector,” he said, dropping a hint that government could withdraw the subsidy in case talks collapse.

Sources said that policy level dialogue between Pakistan and IMF continued late night on Monday. Pakistan’s economic team was headed by Finance Minister Ishaq Dar and IMF delegation was led by Jaffery Frank. However, no positive development was made on the first day of formal talks, as neither of side was ready to show flexibility.

Sources said that the government had already decided against taking any dictation on imposing new taxes and increasing discount rate. But, the visiting IMF team insisted that Pakistan government impose new taxes to reach the seemingly unrealistic target of Rs2,475 billion in ongoing financial year. They said that without these tough measures the Federal Board of Revenue (FBR) would miss the revenue collection target.

Similarly, serious differences on the issue of increase of power tariff emerged between the two sides, as the Fund asked to completely withdraw the power subsidy – that would result in inflated bills to the consumers. The IMF team was of the view that budget deficit could not be controlled unless government did not withdraw the power subsidy, sources added.

The IMF mission, which has been in the country since June 19, has raised question marks on the government’s tax collection target, loose monetary policy, projections for foreign inflows and the proposed measures to achieve macroeconomic targets in the medium-term. Unconvinced by the fiscal and economic projections and the expected outcomes, the IMF mission also wants a reduction in development spending (which was increased 50 per cent under the PML-N’s first federal budget) and more taxes to limit the fiscal deficit.