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Talks with IMF

The International Monetary Fund has said that it held constructive discussions with Pakistani authorities during last week’s spring meetings in Washington and its mission will visit Pakistan soon to continue talks on proposed bailout package. Finance Minister Asad Umar, who led the Pakistani delegation at the spring meetings, had said earlier this month that the mission would visit Islamabad soon and an agreement should be signed by the end of this month. According to media report, the finance minister went to New York on Friday but his team, which includes senior officials of his ministry and other government agencies, stayed in Washington for further talks.

Asad Umar had said the two sides had almost reached an understanding on the bailout package and in a day or two, we hope to reach a full agreement.

The report said that IMF officials were also seeking details of the China-Pakistan Economic Corridor, along with a written guarantee from both Pakistan and China that the IMF assistance will not be used to repay loans to China and the IMF insists on full disclosure of all financial cooperation between Pakistan and China.

It added that the finance minister is likely to visit China on April 25 for talks on the IMF concerns over CPEC and IMF will wait to hear from him before it finalises the bailout package.

Pakistan wants the IMF to review some of the conditions it has attached to the package while the IMF insists that those conditions are absolutely essential for a successful completion of the programme.

Pakistanis point out that this would be their 14th package with the IMF, if finalised. They argue that the conditions attached to previous programmes were also not fully implemented because they were too restrictive.

The conditions proposed by the IMF are the making the State Bank independent, a market-oriented exchange rate, expanding the tax target by Rs5,000 billion, ending income tax concessions, more taxes on salaries, narrowing the amount of taxable income from Rs12 lakh a year to Rs4 lakh, reducing electricity and gas losses, no government interference in Nepra and Ogra policies, Rs140 billion electricity and gas revenue losses be recovered from consumers. It seems that the conditions imposed by IMF for this bailout package are becoming tough because the government could not take decision regarding this important issue on time. Now the economic situation has reached to a point where it needs bailout package as soon as possible and further delay will create more difficulties. Although the government is facing difficult situation but it should present its case strongly and should bargain on the conditions which cannot be implemented. Faster finalization of the program will provide relief to Pakistan’s ailing economy.

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