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Monday May 20, 2024

Fuel subsidy plan gives IMF excuse to delay agreement

By Mehtab Haider
March 30, 2023

ISLAMABAD: The half-baked cross-fuel subsidy proposed by the petroleum ministry has given an excuse to the IMF to delay the staff-level agreement with Pakistan.

The Fund has rejected the initial cross-fuel subsidy plan arguing that more details are required to verify its sustainability.

The question arises as to why the Prime Minister’s Office and Ministry of Petroleum announced the plan without taking the IMF review mission into confidence prior to its announcement.

The Ministry of Finance has distanced itself from the plan proposed at a time when Pakistan and the IMF are inching towards signing the staff level agreement.

The Ministry of Petroleum has been advised to withdraw the proposal at this stage and iron out the policy details with the Ministry of Finance and then take the IMF into confidence in the next review. Another question arises why the subsidy was announced which would be implemented after six weeks, said official sources. They said when a country passed through the IMF reviews, the routine summaries of ministries/divisions were stopped in order to avoid triggering any controversy.