Talks between Pakistan and the International Monetary Fund (IMF) could begin on 18 May for 10 days in Qatar, according to sources.
The IMF has imposed preconditions, including the discontinuation of petroleum subsidies, before the talks, which is why the government is considering phasing out subsidies on petrol and electricity.
The government is currently giving a subsidy of Rs. 65 billion on petroleum products, Rs. 21 billion on petrol (MS), and a subsidy of Rs. 44 billion on diesel. This week, the Ministry of Finance will prepare a plan to end the subsidies and present it to the IMF during the negotiations. The subsidy per unit of electricity is also likely to be scrapped, the sources said.
However, ending the subsidies on petroleum products and electricity could consequently increase inflation in Pakistan.
A representative of the IMF told ProPakistani that it “expects to field a mission during May to discuss with the authorities policies to further the EFF’s 7th review.”
As per the sources, the finalization of new loan deals with Saudi Arabia, China, and the United Arab Emirates (UAE) is likely to be delayed. These three countries are the main lenders that help Pakistan meet its quick cash requirements in dollar terms.
Pakistan has requested and awaits the rescheduling of the Chinese commercial loan of $2.3 billion. Another loan of $1 billion from China will mature this month. For the first time, China has now placed a condition for rearranging its loan of $2.3 billion that Pakistan had repaid in March on the assumption of receiving it again in April, but it is still overdue.
Pakistan’s weakening financial situation has led China to set the condition that its loan should only be treated as part of the reserves. The government had asked that this money be allowed for payments against Chinese imports, the decision for which is still pending.
Meanwhile, no dates for Prime Minister Shehbaz Sharif’s maiden visit to China have been announced, but the possibility of any contact between the heads of the two governments is being explored, the sources revealed.
They added that the chances of securing any immediate cash from Saudi Arabia before an IMF deal are low. However, the kingdom is unlikely to withdraw the $3 billion cash facility that it had provided last November at a four percent interest rate.
Also, the chances of receiving more oil on deferred payments over and above the existing limit of $100 million per month seem unlikely, the sources added.