IMF objects to Prime Minister’s relief package

ISLAMABAD: Terming the breaches committed by Pakistan “deviation”, the International Monetary Fund (IMF) raised serious objections over the Prime Minister’s relief package as talks between the two leaders remained inclusive, The News reported.

Pakistan and the IMF’s seventh review talks for the release of the next loan tranche have so far remained inclusive after breaches committed by Islamabad on different fronts.

During the dialogue, the IMF staff objected to the prime minister’s relief package for slashing down petrol, diesel, and electricity prices as well as granting tax amnesty to the industrial sector.

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The fund had slapped the condition that Pakistan will not grant any tax amnesty and it is part of a continuous structural benchmark. However, Islamabad breached this continuous structural benchmark which now requires a waiver from IMF’s Executive Board for completion of the seventh review and release of the next tranche.

For striking consensus on Memorandum of Financial and Economic Policies (MEFP), the IMF has asked Islamabad to jack up discount rate, allow free movement of the exchange rate, slash down Kamyab Pakistan Program (KPP) and reverse relief package measures to fall in line with prudent financial management to avoid future bankruptcy.

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The review talks were scheduled for two weeks and are expected to conclude on coming Wednesday (March 16, 2022).

With emergence of new realities on the macroeconomic front, the IMF has opposed the PM’s relief package under which the petrol and diesel prices were reduced by Rs. 10 per litre and electricity prices by Rs. 5 per unit from March to June 2022.

Moreover, the government has envisaged disbursing loans of Rs. 470 billion under the much-hyped Kamyab Pakistan Program but the IMF is asking to slash down this amount for two years period until June 2023.

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