A long-awaited loan agreement between Pakistan and the International Monetary Fund (IMF) will be signed once a few remaining points, including a proposed fuel pricing scheme, are settled, an IMF official confirmed on Friday.
The coalition government and IMF have been negotiating since early February on an agreement that would release $1.1 billion to the cash-strapped country of 220 million people.
The latest issue is a plan, announced by Prime Minister Shehbaz Sharif last week, to charge affluent consumers more for fuel, with the money raised used to subsidize prices for the poor, who have been hit hard by inflation, which in February was at its highest in 50 years.
Petroleum Minister Musadik Malik told Reuters on Thursday that his ministry had been given six weeks to work out the pricing plan.
But the IMF’s resident representative in Pakistan, Esther Perez Ruiz, said the government did not consult the fund about the fuel pricing scheme.
Ruiz, in a message to Reuters, confirmed a media report that a staff-level agreement would be signed once a few remaining points, including the fuel scheme, were settled.
She added that the fund would ask the government for more details about the fuel proposal, including how it would be implemented and what protection would be put in place to prevent abuse.
The petroleum and finance ministries did not immediately respond to a request for comment.
With enough foreign reserves to only cover about four weeks of necessary imports, Pakistan is desperate for the IMF agreement to disperse a $1.1 billion tranche from a $6.5 billion bailout agreed upon in 2019.
The government has already implemented several fiscal measures, including devaluing the rupee, lifting subsidies and raising energy prices as preconditions for the agreement, which Finance Minister Ishaq Dar said this month was “very close”.
Earlier this week, the government shared its strategy for the recently-announced fuel relief program, which is to be implemented in three phases and will “provide a relief of up to Rs50 per liter to the poor”.
The scheme’s announcement had come days after the government increased the prices of all petroleum products — except the insignificant light diesel oil — by up to Rs13 per liter for the next fortnight.
