In another setback for the Pakistan, the International Monetary Fund (IMF) is not ready to bail out the country yet based on the guarantees and assurances given by the Shehbaz Sharif government as the international creditor wants all political parties on board.
The IMF told finance minister Ishaq Dar clearly that the conditions for the bailout are stringent, including cut in the defence budget, additional taxes and increase in electricity tariffs.
Pakistan held first round of talks with IMF on Tuesday where Dar briefed IMF Pakistan Mission chief Nathan Porter on the “fiscal and economic reforms” and measures being taken by the government.
According to Pakistan daily Dawn, Porter seemed adamant on implementing calibrated and strong measures to bridge the fiscal gap between Rs 2 trillion and Rs 2.5 trillion. “You don’t have any other option” was his message to the members of power and finance ministries of Pakistan, as quoted by Dawn.
The Pakistani government cannot bring an ordinance in Parliament to implement more taxes as it will take another 14 days.
Sharif had earlier said the Pakistan coalition government is determined to finish the bailout plan even if it is at the political cost, considering the national election is just months away.
The IMF programme of $6.5 billion will end in June 2023, and, so far, $3.5 billion remained undisbursed.
Pakistan was not yet able to complete the 9th review, which, according to the revised schedule, had to be done during the first week of November 2022.
The 9th review pertained to the July-September 2022 period but both the authorities would also discuss the results of the October-December 2022 period, which pertained to the 10th review.
Pakistan received a $6 billion bailout by the IMF in 2019, which was topped up with another $1 billion last year.
Last week, Pakistan removed an artificial cap on rupee, resulting it in losing 14.73% in interbank trading. It fell to 270 per dollar on Monday, according to the foreign-exchange desk at AKD Securities. The central bank also raised interest rates this month by 100 basis points to fight inflation.
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