The International Monetary Fund (IMF) is pressing Pakistan to withdraw the relief package announced by former Prime Minister Imran Khan. The demands include an increase in power and fuel prices, reduction in subsidies, ending the tax amnesty scheme for the industrial sector and increase in tax rates for the revival of the loan program, sources said.
The talks between Pakistan and the International Monetary Fund (IMF) are currently underway under the seventh review of the loan program, the IMF will release a $1 billion tranche after successful talks.
Sources said that the IMF team is pressing Pakistan to take decisions that are not easy for the coalition government. One of the key IMF demands is the withdrawal of the relief package announced by former Prime Minister Imran Khan on February 28. Under the package, the former premier had announced to keep prices of petroleum unchanged till June 2022.
The government has to pay a subsidy to the tune of Rs. 70 billion every month to maintain the prices of petroleum products, according to the official estimates. The government has also withdrawn sales tax on all petroleum products which was historically the main contributor to the sales tax collection. The former premier had also announced to provide cheaper electricity by giving Rs. 5 per unit subsidy.
The IMF wants an increase in the rates of electricity, petroleum products, and gas for the revival of the loan program, sources said. The IMF also wants to introduce a system in Pakistan under which all cabinet members, both elected and non-elected, have to declare their assets.
The new coalition government is also under pressure by the international lender to increase the income tax rates which the last government was resisting.
The Pakistani side led by Finance Minister Miftah Ismail will try to convince the IMF team for relaxing the tough conditions for the revival of the loan program.
Experts believe that a new wave of inflation will hit the country if the government increases oil prices according to the IMF demands. The talks between Pakistan and IMF are likely to conclude on April 24.
