Pakistan Faces Tough Preconditions From IMF For Revival Of Stalled $6 Billion Loan Facility
The IMF has set tough preconditions like hiking electricity tariffs and imposing a levy on petroleum products to revive the stalled $6 billion bailout package to Pakistan, media reports said on Wednesday (29 June).
The development comes days after the cash-strapped country struck a deal with the global lender on the much-needed loan facility.
The IMF has also asked Pakistan to set up an anti-corruption task force to review all the existing laws that were aimed at curbing graft in the government departments, the reports, quoting sources as saying.
After implementing the conditions, the IMF would present Pakistan's request for the approval of the loan tranche and revival of the program to its executive board a process that may consume another month, the Express Tribune reported.
The IMF has also asked Pakistan to end the government’s role in setting the fuel prices after the bitter experience of giving fuel subsidies of over Rs300 billion, according to the sources quoted in the report. The global lender has set a prior condition that the fuel prices will be deregulated and automatically adjusted to recover the actual cost of buying from the consumers. The government’s taxes will be over and above the global prices. This means the petrol price may daily change at the filling station.
The new conditions set by the IMF includes increasing electricity tariffs, the cabinet taking the decision to gradually impose Rs 50 per litre petroleum levy to collect Rs 855 billion.
The demands came amid the government's decision to seek the National Assembly's approval on Wednesday to amend the Petroleum Products (Petroleum Levy) Ordinance, 1961.
The law is proposed to be amended to slap Rs 50 per litre petroleum levy on high-speed diesel, petrol, high octane blending component (HOBC), E-10 gasoline, superior kerosene oil and light diesel.
It has also proposed Rs 30,000 per metric tonnes liquefied petroleum gas levy.
Cash-strapped Pakistan is facing growing economic challenges, with high inflation, sliding forex reserves, a widening current account deficit and a depreciating currency.
Earlier on 22 June, Pakistan secured a deal with the IMF to restore the $6 billion assistance package and unlock doors for financing from other international sources.
The revival of the facility will immediately provide access to USD 1 billion, which Pakistan badly needs to buttress its dwindling foreign exchange reserves.
(With inputs from PTI)
As you are no doubt aware, Swarajya is a media product that is directly dependent on support from its readers in the form of subscriptions. We do not have the muscle and backing of a large media conglomerate nor are we playing for the large advertisement sweep-stake.
Our business model is you and your subscription. And in challenging times like these, we need your support now more than ever.
We deliver over 10 - 15 high quality articles with expert insights and views. From 7AM in the morning to 10PM late night we operate to ensure you, the reader, get to see what is just right.
Becoming a Patron or a subscriber for as little as Rs 1200/year is the best way you can support our efforts.