ISLAMABAD: International Monetary Fund (IMF) has reportedly asked the government to withdraw subsidies on flour, ghee, pulses, rice, gas, and electricity as review talks are set to commence next month.
Finance Minister Shaukat Tarin is scheduled to visit Washington from October 12 to attend meetings of the World Bank and IMF and hold review talks for borrowing $1 billion under Extended Fund Facility (EFF) programme. The talks will focus on Pakistan s economy, achievement of targets, subsidies, tariffs and revolving credit situation.
The IMF has demanded to withdraw subsidies and establishment of financial discipline, saying the subsidy on flour, ghee, sugar, pulses and rice should be abolished and targeted subsidy should be given only to those involved in the Ehsaas program.
Ahead of the talks, Tarin expressed the government’s commitment to the fund’s programme, and hoped to successfully complete the upcoming review. He said the government is committed to boost growth-driven recovery from the blow to the economy from coronavirus.
“The government is committed to the IMF program and hopes to successfully complete the upcoming review as well as Article IV consultations,” Tarin said. The minister expects Pakistan to successfully complete sixth and seventh reviews of its $6 billion loan programme.
Pakistan and the IMF staff would commence the first round of virtual technical talks from Wednesday (today). This would be followed by policy-level talks to strike an agreement on sixth and seventh reviews under the EFF.
The IMF would also raise questions about the sustainability of the Kamyab Pakistan Programme (KPP) in its upcoming virtual review talks. The Economic Coordination Committee (ECC) of the federal cabinet had recently approved the programme.
IMF’s resident representative Esther Perez Ruiz recently met minister Tarin accompanied by the outgoing representative Teresa Sanchez. Tarin said Pakistan was firmly committed to pursuing an all-inclusive and sustainable economic growth with key focus on “bottom-up” approach to uplift marginalised segments of the society.
He underlined the key initiatives of the government to provide maximum relief to the masses. He said the government was taking a range of administrative, policy and relief measures to absorb the upward pressure on prices of basic food commodities due to pandemic.
The government has adopted a multi-pronged strategy to enhance revenue collection and to broaden the existing tax base. He also highlighted Federal Board of Revenue’s (FBR) performance in surpassing revenue collection targets in recent months.
The new IMF representative had commended Pakistan’s efforts in managing the spread of virus through a series of smart and targeted lockdowns to strike a balance between lives and livelihoods. She expressed hope to work closely with the government of Pakistan during her tenure.
