The IMF has has demanded Pakistan to provide all details of China’s financial support to the cash-strapped country to avail a bailout package from it, according to reports. The International Monetary Fund mission is in Pakistan and holding talks with officials over arranging an unspecified amount to help in addressing the balance of payment issue. As talks enter the final phase, the IMF set stricter conditions for Pakistan to implement in exchange for a bailout package – much needed for economic revival.
Some of the major conditions include imposition of more taxes worth Rs 150 billion, further reduction in the rupee value as well as a tighter monetary policy. It also sought from Pakistan all details of Chinese financial support for any bailout package to Pakistan. Led by its mission chief Harald Finger, the IMF delegation is holding meetings with government officials to know their viewpoint on the reforms.
There were no indication that the two sides are close to any agreement, Dawn reported.
Finance Minister Asad Umar said on Monday that the talks were moving ahead positively but there were still differences, the report said. “There are still gaps in the position of the IMF and the position that we have,” Umar said after a series of meetings with an IMF team.
Umar said the IMF visit would conclude on Tuesday and he had no funding emergency to worry about day after tomorrow. He said that USD 1 billion of the USD 3 billion committed by Saudi Arabia had been remitted to the State Bank of Pakistan on Monday and the remaining USD 2 billion would follow over the next few days.
Pakistan looks forward to about USD 6 billion financial bailout for averting its balance of payments crisis. Informed sources said the two sides had a wide gap in their positions on the need for increase in electricity tariff, upward revision in the revenue target and additional tax measures on matters relating to Chinese assistance and its impact — both inflow and outflow.
The sources said the IMF also demanded that the provincial governments finance the Benazir Income Support Programme (BISP), instead of the federal government, and wanted committed cash surpluses to minimise the consolidated fiscal deficit. Regarding the Chinese financing, the minister said there was complete transparency in the Chinese assistance and whatever the external debt was would have to be shared with the IMF as part of the programme, the report said.
The sources said the IMF mission wanted a clear roadmap for elimination of power sector circular debt that currently stood at Rs1.2tr and welcomed administrative measures to recover some arrears, but insisted on further increasing electricity rates for full cost recovery of power supply, it said.
The sources said the IMF team was not satisfied with the power sector reforms plan and wanted the government to surrender its powers to set electricity tariff and let these be independently dealt with by the power regulator.
Pakistan’s current account deficit widened 43 percent to USD 18 billion in the fiscal year that ended in June, while the fiscal deficit has ballooned to 6.6 per cent of gross domestic product.