Pakistan economic crisis: Oppn may create hurdles in govt's decisions, says IMF

Cash-strapped Pakistan and the IMF are currently in talks for the completion of a programme review for a bailout package.

Published: 01st February 2023 03:30 PM  |   Last Updated: 01st February 2023 03:30 PM   |  A+A-

Pakistan’s Finance Minister Ishaq Dar (L) meets with IMF team review mission team in Islamabad, Jan. 31, 2023. (Photo | AFP)


ISLAMABAD: The IMF has expressed concern that Pakistan's opposition parties might create hurdles in the way of implementing the tough economic decisions of the cash-strapped Shehbaz Sharif-led government, media reports said on Wednesday.

The views of the global lender came as a high-level delegation led by the International Monetary Fund (IMF) Mission Chief Nathan Porter on Tuesday met Finance Minister Ishaq Dar and other officials as part of the opening session of 10-day long talks for the completion of the much-delayed programme review for a bailout package.

Porter raised the question about the implication of the opposition's role in difficult decisions that Pakistan would have to take to avoid the default, The Express Tribune newspaper reported.

"The fund had concerns that the opposition might create some problems in the way of rolling out additional taxation measures that the government was planning to impose to revive the talks," it quoted Porter as saying.

However, Finance Minister Dar assured the IMF mission head that the government believed in political dialogue and there was nothing to worry about.

Dar stated that the government would try to enforce additional taxes in a manner that would avoid any untoward legal and political challenges, the report said, citing sources.

The government was planning to promulgate a presidential ordinance but in case the IMF concerns remained, it might bring an act of parliament. Parliament route would take at least 14 days before the new taxes were implemented, the report said.

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Pakistan signed a USD 6 billion IMF programme during Imran Khan's government in 2019, which was increased to USD 7 billion last year.

The programme's ninth review is currently pending with talks being held between IMF officials and the government for the release of USD 1.18 billion.

But the IMF suspended disbursements in November last year due to Pakistan's failure to make more progress on fiscal consolidation amidst the political turmoil in the country.

As part of the tough decisions, the Pakistani government on Tuesday hiked the price of Liq­u­efied Petroleum Gas (LPG) by 30 per cent and finalised a minimum of Rs 6 per unit average increase in electricity rates between now and August, according to a report in the Dawn newspaper.

During the talks, Dar assured the IMF team that Pakistan would soon roll out a plan to reduce the gas sector's circular debt by half to around Rs700 billion.

Dar, according to the finance ministry, said that reforms were being introduced in the power sector and a high-level committee had been formed for devising modalities to offset the menace of circular debt in the gas sector.

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