Pakistan and IMF Agree to Resume Talks From Next Week

International Monetary Fund’s (IMF) Resident Representative for Pakistan Esther Perez Ruiz Friday confirmed to ProPakistani that the Fund mission will start a staff mission on May 18 with the Pakistani authorities in Doha, Qatar.

Talks between IMF and Pakistani authorities are expected to continue for a week. Pakistan has already requested the IMF to extend the bailout program for one year and to enhance the size of the loan program from $6 billion to $8 billion. Pakistan had also agreed to end the unfunded subsidies.

However, the IMF resident representative remained quiet about changing the venue of stalled negotiations from Islamabad to Qatar.

Sources told PropPakistani that there is a perception that former Finance minister Ishaq Dar will be in Qatar next week when the Pakistani team will start the technical as well as policy-level talks with IMF.

The former Finance minister is giving strategic related advice to incumbent FM Miftah Ismail and high ups of the finance ministry.

Recently, Dar in an interview also suggested his government renegotiate the loan agreement with the IMF instead of seeking an extension to the existing package.

It is expected that both sides will also discuss recommendations for the upcoming budget for the next fiscal year. The IMF will also press Pakistan to raise the revenue collection target to Rs. 7.25 trillion for the next fiscal year, up from the Rs. 6.1 trillion revenue target for the ongoing fiscal year.

The government will have to impose additional taxes of at least Rs. 300 billion to achieve the enhanced revenue target. The tax slabs for personal income tax may also be changed. There’s also a proposal to end the tax exemption available to different sectors, including the tax exemption on tractors and urea.

On the other hand, FM Miftah Ismail last month during his tour to the US also requested the IMF to extend the EFF program for one more year besides enhancing the total loan amount to $8 billion from $6 billion which was welcomed by IMF as it stated in its press release that this is a signal of Pakistan’ commitment to address existing challenges and achieve the program objectives.

Sources said that PMLN leader Nawaz sharif also directed his younger brother, the PM of Pakistan, to engage the IMF due to the deteriorating economic situation.

The IMF had asked the Pakistani government to withdraw untargeted subsidies announced by former PM Imran khan by increasing fuel prices besides ending the amnesty scheme for the industrial sector.

It is pertinent to mention that the US dollar climbed above Rs193 in the interbank market whereas SBP reserves during the week ended on May 6, 2022, decreased by $190 million to $ 10,308.7 million due to external debt repayments.

Earlier, it was also reported that Saudi Arabia has also linked additional deposits to SBP with the revival of the IMF stalled bailout programme.

Recently, Pakistan had requested Saudi Arabia for an additional deposit and oil financing facility during the visit of PM Shehbaz however a statement followed a visit by PM Shehbaz Sharif to Saudi Arabia said the two countries will discuss the possibility of supporting the Kingdom’s $3 billion deposit in Pakistan’s central bank by extending its term “or through other options”.