Breakthrough expected in Pakistan-IMF talks ‘in 72 hours’

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ISLAMABAD: After the removal of subsidies from the petroleum products, senior officials of Pakistan and the International Monetary Fund (IMF), in last-ditch efforts to iron out differences in budgetary numbers, continued a round of parleys with Islamabad expecting a breakthrough within the ‘next 72 hours’,

In order to convince the Fund to revive the stalled $6 billion programme, the government took the toughest measures to end fuel subsidies and hiked the petroleum product [petrol, oil, lubricants] prices up to unprecedented levels. However, the IMF is still insisting on doing more knowingly that Islamabad has turned into a ‘desperate borrower’ mainly owing to the depletion of foreign currency reserves.

Top official sources confirmed to the publication that the IMF staff had not yet shared the first draft of the Memorandum of Financial and Economic Policies (MEFP) with Pakistani authorities. Now another meeting between Pakistan and the IMF is also scheduled for today (Saturday) to move toward the desired objectives.

The sharing of the draft MEFP is a prerequisite for moving towards the signing of the staff-level agreement as it provides the basis of a framework on which both sides evolve consensus and then this signed document duly by the finance minister and governor central bank is forwarded before the IMF’s Executive Board for seeking approval for completion of pending review and release of the next tranche.

One top official disclosed that Finance Minister Miftah Ismail held a virtual meeting with the IMF’s mission chief, which was also attended by the IMF director dealing with Pakistan on Friday evening and both sides made some ‘positive progress’ toward evolving a consensus on MEFP.

Another senior government official confided to the publication that the finance minister and state minister for finance held a meeting with the US ambassador on Thursday but it would not be sufficient as Islamabad would have to establish ‘contacts’ with the US Treasury high-ups to muster up the required support after evolving a consensus on the framework on the basis of which both sides could make progress for signing MEFP document.

“Without broader agreement on the basis of framework, no one could help Pakistan,” said the official and cited an example that when the framework was agreed upon, then Washington’s help could be sought on one or two critical outstanding issues between the two sides.

They were of the view that in the past if both sides could not evolve a consensus on the exact parity of exchange rate, then the influence of key countries such as the US or EU could be sought.

The outstanding issues between the two sides included revised rates on personal income tax (PIT) for salaried class, projection of petroleum levy to the tune of Rs750 billion, working out of power sector subsidies as well as Utility Stores Corporation (USC) subsidies for the next budget.