ISLAMABAD: Pakistan and the International Monetary Fund (IMF) have so far failed to strike staff-level agreement under $6 billion Extended Fund Facility (EFF) for the release of the next tranche.
According to reports, the fresh round of talks from October 4 to 15 for the release of the $1 billion loan tranche remained inconclusive amid uncertainty over the future roadmap. The talks failed despite Pakistan having implemented the condition of increasing electricity and petroleum products prices.
Both sides have shown resolve to remain engaged after being unable to agree on Memorandum of Economic and Financial Policies (MEFP). Finance secretary Yousaf Khan is expected to stay in Washington DC till Tuesday for making last-ditch efforts to reconcile and evolve consensus on the macroeconomic policies.
Finance Minister Shaukat Tarin, whose tenure expired on Friday, met with IMF managing director Kristalina Georgieva and US Assistant Secretary of State for South and Central Asia Donald Lu. However, the talks with the head of the financial institution remain futile.
Shaukat Tarin and Governor State Bank of Pakistan (SBP) Ali Reza were scheduled to go to New York but would remain in contact virtually and hope that review talks would be concluded within the next few days.
Pakistan and the IMF have so far failed to agree on the Memorandum of Economic and Financial Policies (MEFP) which is the base for the bailout programme. This is the second time that Pakistan and the IMF could not find a basis for the completion of the 6th review as its first attempt in June also failed.
Pakistan and the IMF could not agree on additional taxes and the roadmap for fiscal stability of the power sector. There are also issues about increase in gas prices and measures needed to contain the current account deficit.
The IMF had demanded to impose additional taxes equal to at least 1% of the GDP or over Rs525 billion. The government had initially agreed but was willing to take measures to the tune of Rs300 bQillion.
In July 2019, Pakistan and the IMF had signed a 39-month EFF for $6 billion but the programme remained largely off track, resulting in disbursements of only $2 billion in two years. The 6th review talks relates to the disbursement of the next loan tranche of $1 billion. Pakistan has already accepted two conditions of the IMF.
The government has increased the electricity prices by Rs1.39 per unit and also jacked up the petroleum products prices by Rs10.49 to the new historical level of Rs137.79 per litre.
