Govt is committed to reviving IMF programme: Miftah Ismail

ISLAMABAD: Terming his talks with the International Monetary Fund (IMF) “very useful and constructive”, Finance Minister Miftah Ismail on Thursday said that the team of the Washington-based lender emphasised the importance of rolling back the fuel power subsidies, which were given by the PTI-led government in contravention of its own agreement with the fund.

Taking to Twitter after the talks with the IMF over the revival of the $6 billion loan programme failed, Miftah Ismail said, “I have just returned from Doha after talks with the IMF. Our delegation had very useful and constructive discussions with the IMF team over the last week.”

He said that they discussed significant slippages in FY22, caused in part by the fuel subsidies given in February 2022.

Ismail said that they also discussed targets for the next fiscal year.

“We would need to have a tight monetary policy and consolidate our fiscal position. Thus govt is committed to reducing the budget deficit in FY23,” he added. 

Pakistan, IMF fail to reach staff-level agreement

A day earlier, the IMF delayed the revival of the stalled $6-billion programme under External Financing Facility (EFF) for Pakistan.

The revival was expected to bring stability to the financial markets, the fast-weakening Pakistani rupee, and the depleting foreign exchange reserves, as the government had pinned hopes on the programme's resumption.

Pakistan failed to convince the IMF, as both sides could not reach a staff-level agreement despite week-long negotiations in Doha, Qatar, from May 18-25.

The Fund, in a statement, has emphasised the abolition of subsidies on petroleum products and electricity, among other conditions, as a prerequisite for the programme's revival.

Following the conclusion of the talks, IMF Mission Chief for Pakistan, Nathan Porter, said the Fund held constructive discussions with the Pakistani officials, which aimed at reaching an agreement on policies and reforms.

“Mission has held highly constructive discussions with Pakistani authorities aimed at reaching an agreement on policies and reforms that would lead to the conclusion of the pending seventh review of the authorities’ reform program, which is supported by an IMF Extended Fund Facility arrangement."

Porter said considerable progress was made during the mission, including the need to continue to address high inflation and the elevated fiscal and current account deficits, while ensuring adequate protection for the most vulnerable.

The Fund also appreciated the State Bank of Pakistan's (SBP) decision to hike the policy rate from 12.25% to 13.75% — a move made to control the increasing inflation.