Pakistan-IMF review talks in Doha from tomorrow

ISLAMABAD: Pakistan and the International Monetary Fund (IMF) are scheduled to kick-start review talks in Doha from Wednesday (tomorrow) for a week in a renewed effort to strike a staff-level agreement for the release of $1 billion tranche under the Extended Fund Facility (EFF).

In one of the most important rounds of parleys for the economic team of Pakistan, Islamabad will have to convince the IMF to revive the stalled $6 billion programme at a time when the government had not yet moved towards eliminating the unfunded fuel subsidy despite making a commitment with the Fund. 

The government may offer withdrawing the unfunded fuel subsidy if it is able to strike a consensus among the coalition partners. “We want to use it as a bargaining chip because we know that the IMF staff always stressed doing more. It is part of a strategy to move ahead if the IMF seems in a mood to move ahead,” a top official said.

The IMF is all set to ask policymakers for further tightening of fiscal and monetary policies; it will recommend taking additional taxation measures in the upcoming budget. The IMF has asked Islamabad to jack up the FBR’s tax collection target of Rs7,255 billion for the next budget of 2022-23 against the desired target of Rs6,100 billion for the current fiscal year. The IMF is also recommending further jacking up the policy rate by 100 to 150 basis points in the coming monetary policy.

The work done by the Ministry of Petroleum shows that the price differential claims (PDCs) were estimated to cost Rs118.6 billion in May 2022, including Rs55.48 billion for the first fortnight from May 1 to 15, 2022, and projected another Rs63.32 billion for the second half of fortnight from May 16 to 31, 2022. For the next 15 days, there will be PDC claims of Rs37 per litre on MS petrol, Rs78.55 per litre on High-Speed Diesel, and Kerosene at Rs50.89 per litre, and Light Diesel Oil Rs71.06 per litre with effect from May 16, 2022.

“Pakistan’s delegation, led by secretary finance, will hold parleys with the IMF review mission, and after completion of the first round of technical talks, Minister for Finance Miftah Ismail is also expected to join the team in policy-level discussions. These talks will kick-start on May 18 and will last till May 25, 2022 in Doha,” top official sources confirmed while talking to The News here on Monday.

The official said that Pakistan’s negotiating team will comprise the Ministry of Finance, Federal Board of Revenue, and State Bank of Pakistan, including Secretary Finance, Additional Secretary, Ministry of Finance, External, Additional Secretary Budget, Additional Secretary C&F, Acting Governor SBP, and Deputy Governor, chairman FBR and Members IRS and Customs Policy Wings. Some officials of the Ministry of Energy and Power will join the meeting on zoom.

In the wake of dwindling foreign currency reserves and depreciation of the exchange rate, the government desperately requires the IMF backing in order to avert a balance of payment crisis. The foreign reserves held by the SBP were depleted by over $6 billion and touched $10.3 billion on May 6, 2022.

When contacted on Monday, the IMF Resident Chief in Pakistan said: “We remain continuously engaged with the authorities on policies to promote macroeconomic stability in Pakistan. An International Monetary Fund team will start a staff mission on May 18 with the Pakistani authorities in Doha.”