The seventh review of the International Monetary Fund (IMF) program is expected to start on 4 March.
Sources said that the talks, which will include a discussion on the Prime Minister’s (PM) Relief Package, will last for two weeks and will be conducted virtually.
They added that the government is planning to provide a direct subsidy of Rs. 200 billion on electricity during the current fiscal year, and a subsidy of Rs. 16 billion on petroleum products.
The seventh review meeting between Pakistan and the IMF is also expected to be based on Rebased GDP data.
The government rebased the National Account last month from the fiscal year of 2005-06 to 2015-16. According to the rebased data, the total size of Pakistan’s economy swelled to $346 billion.
Due to rebasing the GDP size, the budget deficit in the percentage of the GDP has also been squeezed from 2.3 percent to 2.1 during the first half of the current fiscal year. Other indicators, including the current account deficit and the debt to the GDP, have also been changed due to the rebasing.
Regarding the challenges for the Pakistan side that were discussed during the review meeting, the sources said that although the relief package announced by the PM will be deliberated over, it will not be difficult to convince the IMF about it.
He maintained that the country anticipates that the IMF will consider the difficulties of the general public due to the inflationary impact of oil prices in the international markets. Other governments are also taking steps to protect their masses from the inflationary trend. He said that the IMF understands that the inflation was not accelerated by any steps or policies of the Pakistani government but was due to some events on the international level. In such cases, governments do exactly what the Pakistani government has done to save the general public from inflation.
In answer to a query about the slashing of the Public Sector Development Program, the sources said that Pakistan and the IMF have already agreed to slash it from Rs. 900 billion to Rs. 700 billion during the sixth review meeting. The expenditures of the Public Sector Development Programme (PSDP) during the first half of the current fiscal year show that the government has very limited choice to cut the development funds as it has used most of the allocated amount for the first half, as per the sources.
According to the Planning Commission, the government has authorized or disbursed Rs. 566 billion and Rs. 322 billion has been used for PSDP projects during the first seven months of the current fiscal year.
On the other hand, a senior official in the Planning Commission has claimed that the ministry is neither working on squeezing the PSDP nor cutting the development project. He also claimed that the Finance Ministry did not formally notify the Planning Commission about slashing the PSDP from Rs. 900 billion to Rs. 700 billion so far.
Some experts believe that the government has to reallocate the PSDP funds to the subsidy for protecting the general public from the wave of inflation.
