ISLAMABAD - Pakistan is reluctant to accept tough conditions of International Monetary Fund (IMF) for bailout package including increasing power tariff, depreciating local currency and enhancing taxation.

Talks between visiting IMF delegation and Pakistan’s government have continued her on Monday, which may end today (Tuesday). Finance Minister Asad Umar headed Pakistani delegation and the IMF delegation was led by Harald Finger.

Talking to media, Umar said that there are differences on many issued between Pakistan and the IMF. He further said that talks would continue today (Tuesday). There is complete transparency in our economic data including foreign debt, he added.

Sources informed that IMF has sought details of proposed Pakistan’s economic package from China to improve its balance of payment situation. Similarly, the delegation has also asked to provide details of Chinese loans including under China Pakistan Economic Corridor (CPEC).

The sources informed that Pakistan has expressed serious concerns over the demands of the IMF for the bailout package. The government’s officials have informed the delegation they could not take tough decisions as the new government had already taken unfriendly measures since it came in power.

The PTI led government had increased the electricity and gas prices, depreciated the currency and introduced mini budget to improve the economic indicators. Additional tough decisions would create political issues for the new government, which has not completed its 100 days in the office, sources informed.

The IMF has reportedly asked Pakistani authorities to take measures to control the soaring twin deficits including budget and current account deficits. The Fund has emphasised on increasing tax collection by Rs100-Rs150 billion by enhancing General Sales Tax (GST) and duties on the luxury items. The visiting delegation has also demanded to bring potential tax evaders into the tax net. It has also proposed to improve reforms in the Federal Board of Revenue (FBR). Additional taxation measures and reforms in FBR would help in restricting the budget deficit at 5.1 percent of the GDP.

The IMF has asked the government for increasing the discount rate to double digit. It further demanded for depreciation in currency to enhance the exports and controlling imports in order to restrict the current account deficit of the country. Similarly, the Fund has asked the government to enhance the power tariff by 20 percent to reduce the volume soaring circular debt of the country.

The country’s foreign exchange reserves could save if current account deficit controls. The Pakistani side informed the IMF that Pakistan has received one billion dollar from the Saudi Arabia on Monday, which would improve the foreign exchange reserves of the country. The Fund was told that Pakistan would further receive two billion dollars from Saudi Arabia in next few days. Similarly, the government would launch Sukuk and Eurobond to build up foreign currency reserves in the weeks to come, which would help in reducing the current account deficit.

A Pakistani diaspora bond will also be launched to attract investment from overseas Pakistanis. The trade deficit will be reduced and impact to this effect is already appearing on the trade front.