ISLAMABAD: The federal government is facing an uphill task in regaining the International Monetary Fund's (IMF) trust, Minister of State for Finance and Revenue Senator Aisha Ghaus Pasha said Wednesday, as Pakistan scrambles to resume the stalled loan programme.
"There was a serious trust deficit between Pakistan and the IMF," Pasha said during the Senate Finance Committee's meeting, which met under the chairmanship of Senator Saleem Madviwala, to discuss the IMF programme.
The Washington-based lender has been in talks with the Pakistani authorities since end-January to resume the $1.1 billion loan tranche held since November, part of a $6.5 billion Extended Fund Facility (EFF) agreed upon in 2019.
The IMF funding is critical for Pakistan to unlock other external financing avenues to avert a default on its obligations. The State Bank of Pakistan's (SBP) reserves are at a critical level of $4.6 billion and cover four weeks of imports.
However, Aisha stated that "there is nothing to worry about" as Pakistan will soon unlock the loan tranche following assurances to the Fund from friendly countries.
"We have made headway in securing financing from friendly countries and the IMF is now confirming details from those nations," the state minister told the committee, noting that external financing was a major obstacle in resuming the programme.
Pasha added that China has always helped Pakistan in dire times, while the $350 billion economy would also secure funds from Saudi Arabia and the United Arab Emirates soon.
The minister, while shedding light on the recent bid of the government to provide relief to the masses, said the petrol subsidy has not been completely designed as of yet.
She noted that once the scheme is put down on paper, the IMF would be informed about it. “The subsidy on petrol is still a proposal,” the state minister said, adding that its framework is yet to be finalised.
She added that the IMF has pressed Pakistan to provide targeted subsidies.
The Shahbaz Sharif-led government had announced a plan to charge affluent consumers more for fuel in order to subsidise prices for the poor, who have been hard-hit by inflation, which hit the highest in 50 years.
Following the announcement, IMF’s resident representative in Pakistan, Esther Perez Ruiz, said the government had not consulted the Fund about the scheme.
The lender demanded Islamabad explain the fuel scheme before any loan deal.
“Fund staff are seeking greater details on the fuel subsidy scheme in terms of its operation, cost, targeting, protections against fraud and abuse, and offsetting measures, and will carefully discuss these elements with the authorities,” Ruiz said.