Pakistan and International Monetary Fund have failed to strike a staff-level agreement due to the government’s inability to withdraw fuel and electricity subsidies.
It has been observed that a deadlock persists between the two sides whereby the IMF has linked the revival of stalled $6 billion Extended Fund Facility (EFF) programme to the removal of unfunded fuel and power subsidies as well as presenting the next budget for 2022-23 in line with the fund programme objectives.
This indicates that the IMF programme will only be revived once the government hikes the POL and electricity prices. The government will have to present and approve the next budget for 2022-23 in line with the fund agreement.
“The IMF team looks forward to continuing its dialogue and close engagement with Pakistan’s government on policies to ensure macroeconomic stability for the benefit of all of Pakistan’s citizens,” the IMF statement concluded.
These unfunded subsidies were provided by the PTI regime and now the Shehbaz government is finding it hard to reverse them. The IMF and Pakistan authorities will continue the talks. “The talks will continue” was the brief response from Pakistani negotiators in Doha who also stated that the IMF had placed a pre-requisite to withdraw fuel subsidies.
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