ISLAMABAD: Finance Minister Miftah Ismail departed for Washington in the wee hours of Thursday to renegotiate the $6 billion Extended Fund Facility programme with the International Monetary Fund (IMF).
In May 2019, Pakistan and the IMF reached a staff-level agreement on economic policies for a three-year Extended Fund Facility (EFF). Under the agreement, Pakistan was to receive about $6 billion during a period of 39 months, and so far it has received almost half it. Pakistan is waiting for the IMF to resume talks on its seventh review of the facility which was put on hold due to the political crisis in the country.
If the review is approved, the IMF will release over $900 million and unlock other external funding. With a yawning current account deficit and foreign reserves falling to as low as $10.8 billion, the country is in dire need of external finances.
The new government faces a tough task to satisfy the IMF as the subsidies announced by the previous government have worsened the financial situation.
“I am off to Washington DC to try and put back on track our IMF programme that PTI and [Imran Khan] derailed, thus endangering our economy,” the finance minister tweeted.
“And more happily, after [three] years of being on ECL, I will get to travel to London on the way and meet my leader Mian Nawaz Sharif,” he said.
IMF sets five conditions
A day earlier, in his maiden press conference, the finance minister revealed that the Fund has put five major demands before the Shehbaz Sharif government for slashing down the primary deficit by Rs1,300 billion through withdrawal of fuel subsidy of Rs150 billion on monthly basis and taking additional taxation measures for reviving the stalled Fund programme.
He said the five conditions include:
- Withdrawal of fuel subsidy
- Doing away with the tax amnesty scheme
- Increasing power tariff
- Taking additional taxation measures
- Reducing the development programme by Rs100 billion to bring it down to Rs600 billion through the PSDP till the end of the current fiscal year