ISLAMABAD - Talks between Pakistan and International Monetary Fund (IMF) ended inconclusively here on Tuesday as Islamabad refused to accept Fund’s conditions for bailout package.
Pakistan and IMF could not bridge the gulf on issues of increase in electricity prices, depreciation of currency, hike in interest rate and imposition of new taxes. Talks, which were continuing since November 7, ended inconclusively. However, both the sides agreed to extend the talks until January next year.
Pakistan has refused to accept tough conditions of the IMF for bailout package. The government has clarified that it could not take anti-people decisions, as it had already taken. The IMF has recommended the government to increase the power tariff by 20 percent to control the soaring circular debt of the country. Similarly, it has suggested for fresh revenue generation measures worth Rs100 billion to Rs150 billion in order to increase the overall tax collection of the country. Furthermore, the Fund has asked to depreciate the currency and increase the interest rate.
However, the government has clarified that it had already enhanced the power tariff and gas prices. Meanwhile, the government will take administrative measures to control power theft and reduce line losses to check increasing circular debt of the country. Similarly, the rupee has already been depreciated recently from Rs124 to Rs134. Therefore, the government said it was not in a position to further depreciate the currency in near future. The government said that Pakistan had already announced mini-budget to increase tax collections.
Pakistan said bailout negotiations with the International Monetary Fund will be extended until lender’s board meeting on January 15 as talks hit an impasse.
Pakistan last month had decided to approach IMF for bailout package, as it needs $12 billion during current fiscal year to meet external financing. However, Pakistan had succeeded in getting $6 billion package from Saudi Arabia, which included $3 billion defer oil payments facility and $3 billion to be placed in State Bank of Pakistan account. Pakistan is in contact with China and United Arab Emirates (UAE) for bailout packages.
According to IMF statement, an International Monetary Fund mission led by Harald Finger visited Islamabad from November 7-20 to initiate discussions on a financial arrangement with the IMF requested by the Pakistani authorities to support their economic reforms programme. At the end of the visit, Mr Finger made the following statement:
"The IMF mission has been engaged in productive discussions with the Pakistani authorities on economic policies and reforms that could be supported by a financial arrangement with the IMF. In this context, there has been broad agreement on the need for a comprehensive agenda of reforms and policy actions aimed at reducing the fiscal and current account deficits, bolstering international reserves, strengthening social protection, enhancing governance and transparency, and laying the foundations for a sustainable job-creating growth path.
“Our dialogue with the Pakistani authorities will continue over the coming weeks.
“The team is grateful to the authorities for open and constructive discussions. The team met with Minister of Finance, Revenue and Economic Affairs Asad Umar; Minister of Planning Khusro Bakhtiar, Minister of State for Revenues Muhammad Hammad Azhar, Adviser to the Prime Minister for Commerce Abdul Razak Dawood, Adviser to the Prime Minister for Institutional Reforms and Austerity Ishrat Hussain, SBP Governor Tariq Bajwa, BISP Chairwoman Sania Nishtar, Finance Secretary Arif Ahmed Khan, FBR Chairman Mohammad Jehanzeb Khan, provincial finance ministers, parliamentarians, other senior officials and representatives of the donor community.”
Meanwhile, the Ministry of Finance has said extensive talks were held between key ministries of the government of Pakistan, including the ministries of finance, planning, development & reforms, and energy, the State Bank of Pakistan, and the IMF Mission. These discussions covered all sectors of the economy. Members of parliament and provincial finance ministries also exchanged views with the Mission.
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, including fiscal and monetary measures, corrective interventions for balance of payments sustainability, pro-poor spending, governance and development of a business-friendly environment.
The government of Pakistan acknowledges and appreciates the support that the Fund is providing in achieving the government’s broad-based development agenda aimed at enhancing the social and economic wellbeing of the people of Pakistan.
Asad briefs PM on IMF talks
APP adds: Finance Minister Asad Umar, who accompanied Prime Minister Imran Khan during his official visit to Malaysia, briefed the prime minister about the visit, meetings and progress till now with the IMF delegation in Pakistan.
Asad informed the prime minister that efforts were being made to settle bilateral affairs with the IMF in such a way which would have positive results on the economy and which could not put burden on the people, a press release issued by the PM Media wing said.
He said progress on meetings held so far with the Fund were encouraging, however, final decision regarding the bailout package would be made keeping in view people’s interests and vision of the government.
Asad told the prime minister that the IMF programme had no immediate pressure on Pakistan’s economy, adding understanding Pakistan’s priorities by the IMF delegation was an encouraging step.
Pakistan, IMF extend bailout talks to January