The final round of talks with the International Monetary Fund (IMF), led by finance minister Shaukat Tarin, will aim to get as much fiscal space as possible for the upcoming budgetary measures under the Extended Fund Facility (EFF) scope.
The power sector is likely to dominate the talks, and Pakistan’s economic team will propose alternate plans for reducing circular debt instead of increasing tariffs, Business Recorder reported quoting an official.
While the government of Pakistan is hopeful that an alternate plan can be agreed upon, the power sector reforms remain the key stumbling block in reaching an understanding with the IMF, the news report said.
Special Assistant to Prime Minister, Dr. Waqar Masood Khan, told a parliamentary panel recently that discussions were ongoing with the IMF regarding the budget and that he was optimistic an understanding would be reached with the IMF on the power sector.
Finance Minister also ruled out any increase in power tariff and said the electricity had already become very expensive in Pakistan. It is getting out of affordability besides making the industry uncompetitive, he remarked.
Pakistan’s economic team will likely propose stretching out capacity payments as a solution to limit the flow of circular debt. The recent payment to the IPPs is a practical step towards this plan and may come in handy during negotiations.
IMF resident representative, Teresa Dabán Sanchez, told the media that the IMF team and Pakistani authorities are engaged in technical meetings.