ISLAMABAD: The International Monetary Fund (IMF) has confirmed that the Fund mission and Pakistani authorities would hold review talks next week on 'the latest economic developments and policy implementation'.
The IMF has also asked Pakistan to proceed with the implementation of policies with the aim of achieving macroeconomic stability, and inclusive and sustainable growth.
It clearly indicates that the IMF wants to see a reversal of fuel subsidies and expects that the government will move ahead with hiking POL prices on May 15, indicating it seemed serious to resume parleys with the IMFfor reviving the stalled IMF program. However, the economic managers are clueless about how to face the backlash on the political front. There are proposals under consideration to hike the POL prices in a gradual manner and also convince the provinces to share the fiscal burden at difficult times.
This correspondent contacted IMF's spokesperson based in Washington D.C. and inquired about the possibility of holding review talks with Pakistan authorities, the written reply stated: "We can confirm that an International Monetary Fund team led by Nathan Porter will meet the Pakistani authorities on May 18 to go over the latest economic developments and policy implementation."
When the IMF’s Resident Chief in Pakistan Esther Perez Ruiz was contacted, she said, "We continue our constructive dialogue with the Pakistani authorities. It is important for the authorities to proceed with the implementation of policies with the aim of achieving macroeconomic stability, and inclusive, sustainable growth, as discussed at the time of the Spring Meetings in Washington D.C. We look forward to continuing policy level discussions during the second half of May."
When asked further, she replied that "continuous constructive engagement is what matters". It is relevant to mention here that on April 24, 2022, Nathan Porter, International Monetary Fund (IMF) Mission Chief for Pakistan, had stated: "We had very productive meetings with the Finance Minister of Pakistan Miftah Ismail over Pakistan’s economic developments and policies under the Extended Fund Facility (EFF) program. We agreed that prompt action is needed to reverse the unfunded subsidies which have slowed discussions for the 7th Review. Based on the constructive discussions with the authorities in Washington, the IMF expects to field a mission to Pakistan in May to resume discussions over policies for completing the 7th EFF Review. The authorities have also requested the IMF to extend the EFF arrangement through June 2023 as a signal of their commitment to address existing challenges and achieve the program objectives."
One top official of the government when contacted said that without taking bold and corrective measures, the revival of the IMF program will be in danger. It is not the issue of hiking POL or electricity prices only but this review mission of the IMF will also finalise the salient features of the coming budget for 2022-23 for achieving the objectives outlined under the EFF program.
The IMF's prescriptions fold into raising Personal Income Tax (PIT) rates and slashing down its number of slabs as well as removing its exemptions. The removal of income tax exemptions for powerful elites is a good omen for the country but increasing rates for salaried and non-salaried will further erode the purchasing powers of have-nots in Pakistan.