The Pdm Government has started implementing the ‘tough conditions’ of the International Monetary Fund (IMF) to revive the $7 billion Extended Fund Facility (EFF) stalled loan Program.
According to details, the Fund and Pakistan moved closer to the revival of their loan program as Government has agreed to several conditions including increasing the Power Tariff and improving tax collection, as per the demand of the IMF.
According to the circular debt management plan, which was presented to the IMF by the finance Ministry the government will jack up electricity prices by Rs7.91 per unit in four quarterly adjustments.
The first unit adjustment will be made from Feb to March 2023, 2nd adjustment will be made from March to May 2023, 3rd adjustment will be made from June to Aug 2023 and4th and the last adjustment will be made from September to November.
Under the circular debt management plan, the government will charge Rs3.21 per unit from now onwards, 69 paise from March-May, and increase again to Rs1.64 per unit from June onwards to August of 2023. From Sep-Nov, the govt will hike the power tariff by Rs1.98 per unit.
The consumer base tariff will be increased from Rs15.28 per unit in June 2022 to Rs23.39 per unit till June 2023. The government also approved the withdrawal of an electricity subsidy of Rs 65 billion given to the exporters, with effect from March 2023.
Furthermore, the PDM govt gave the go-ahead to the recovery of pending fuel cost adjustment from consumers of less than 300 units per month at an average rate of Rs 2.17 per unit to collect Rs 68 billion.
Earlier Pakistan failed to reach any Staff level of the agreement the regarding the IMF Bailout Package of the Extended Fund Facility (EFF) Program.
According to the details, The International Monetary Fund (IMF) handed over the Memorandum of Economic and Financial Policies (MEFP) to Pakistan after the conclusion of talks, however, the staff-level agreement was not signed so far.
Pakistan and the IMF have concluded their talks after having discussions on various economic sections and sectors.
The finance secretary Hamid Yaqoob Sheikh confirmed that the IMF handed over the Memorandum of Economic and Financial Policies (MEFP) to Pakistan. Sheikh said that Pakistan and IMF have not signed a staff-level agreement so far as some matters are due to be settled which will be finalized in Washington.
Hamid Yaqoob Sheikh said that both sides agreed on actions and prior steps. He added that the IMF mission sought more time to sign the staff-level agreement for the 9th review which will be signed after getting approval from the IMF Washington headquarters.
The finance secretary said that the IMF mission is waiting for the approval of the declaration from Washington’s headquarters that will issue a statement after reviewing the recent talks.
Earlier this week The International Monetary Fund (IMF) expressed dissatisfaction over financial indiscipline and mismanagement in government offices and departments.
The IMF often provides assistance to countries facing financial difficulties and may advise governments on how to improve their financial management practices to restore financial stability and promote economic growth. According to sources, the IMF has expressed dissatisfaction over the persistent deficit in state-owned entities.
“There is a lack of improvement in electricity and gas transmission losses,” IMF pointed out. “Pakistan continuously bearing losses in the energy sector,” the IMF delegation observed. “It insisted on privatization of the state entities bearing losses,” sources said.
Some credible sources claim that “IMF is also demanding eliminating corrupt practices and retapes in government entities and business-friendly and convenient tax collection mechanism,”
The lending institution has demanded the privatization of Balloki and Haveli Bahadur Shah LNG power plants, privatization of government banks running in losses, House Building Finance Corporation, and other state-owned entities.
Sources claim that if IMF determines that a government is not adhering to sound fiscal practices, it may delay or withdraw its support.
Prime Minister Shehbaz Sharif while chairing an apex committee in Peshawar said that the International Monetary Fund (IMF) was giving Pakistan “a Tough time” for unlocking stalled $7 billion loan programme.
Premier said “As we all know, an IMF delegation is in Islamabad for holding talks on the stalled loan program and giving a very tough time to the finance minister and his team,”
Premier said, “Our economic situation is unimaginable” adding “You all know we are running short of resources,” Sharif said, adding Pakistan “at present was facing an economic crisis that’s beyond imagination.”
Declaration of Assets
The International Monetary Fund (IMF) demanded Pakistan amend its laws regarding the assets declaration of public servants.
According to the sources inside the Federal Board of Revenue (FBR), the IMF requested the public declaration of the government servants’ assets. not only this but the IMF also demanded details of the overseas assets of the bureaucracy, sources said.
Sources said that The IMF has also demanded to make public the government officers’ assets. IMF Proposed setting up an Electronic Assets Declaration System for transparency.
“Bureaucrats’ assets will be checked prior to the opening of a bank account,” sources said. “Banks will get information from the FBR for the opening of accounts of bureaucrats.”
“All 17 to 22 Grade officers have to provide all information before opening a bank account,” sources said.
It is to be Pertinent that The IMF asked Pakistan to impose roughly Rs600-800 billion in additional taxes in the second round of talks to revive the $7 billion Extended Fund Facility (EFF) stalled for months.