Technical talks between Pakistan and the International Monetary Fund (IMF) for the enhancement and revival of the stalled loan program have commenced.
The talks on the seventh review, which had come to a standstill after the PTI government’s ouster, resumed last week where Pakistan and the IMF agreed, in principle, to extend the stalled loan programme by up to one year and enhance the size of the bailout to $8 billion.
A top official in the Ministry of Finance confirmed that virtual talks at the technical level between Pakistan and the IMF have started and both sides are now discussing different aspects of enhancing the program at the request of the government. Staff-level talks will also start soon, he said.
The official stated that the IMF believes that oil and electricity subsidies announced by former Prime Minister Imran Khan are not sustainable.
The IMF is also concerned about the surging current account and budget deficits as they are also unsustainable. The country’s budget deficit has ballooned to four percent of the GDP in the nine months of the current fiscal year.
The IMF also wants to increase the ratio of the income tax rate in Pakistan, which will very difficult decision for the coalition government.
The sources said that the IMF also wants to accelerate the process of privatization of loss-making state-owned enterprises as they add a huge financial burden on the budget. The government is providing billions of rupees from the national exchequer to run these institutions.
The finance minister had held a meeting with the new Minister for Privatization, Abid Hussain Bhayo, in this regard, and discussed the privatization process for the loss-making state-owned enterprises.
