Pakistan-IMF policy level talks to start from Tuesday

KARACHI: Pakistan and the International Monetary Fund (IMF) will start on Tuesday the next round of talks covering policy framework of the bailout package that Islamabad seeks from the global lender to fend off balance of payment crisis, officials confirmed on Monday.
The IMF delegation which arrived in Islamabad on November 07, 2018 has been engaged with the government officials on technical aspects of the possible program.
Noor Ahmed, official spokesman of Ministry of finance, however, declined to share further details of negotiations between the fund and authorities calling the matter “sensitive.”
On Policy level talks, the Pakistani side will be represented by secretary finance, chairman of Federal Board of Revenue (FBR), governor of State Bank of Pakistan (SBP) and other senior officials led by Finance Minister, Asad Umar.
The IMF delegation, which is expected to stay in the country until November 20, is being led by Harald Finger.
Though concerned officials keep hush about the talks on technical aspect of the possible bailout package and the next level of talks, local media reported that the delegation was informed about a Wealth Fund that the government intends to set up for loss-making Public Sector Enterprises (PSEs) in order to make them profitable before their divestment.
Local media also reported that the IMF was pressing the federal government to hike prices of the petroleum products by up to PKR15 per liter in phased manner, as part of its conditionalities for the financial assistance. However, no officials responded to verify the report when contacted by Arab News.
In the next level of talks commencing Tuesday, the IMF is expected to review country’s central bank’s financial independence and performance of FBR. Besides, the fund will also review Pakistan’s monetary and fiscal policies as well as its financial needs while considering the current account deficit.
The IMF urged the government to control the losses of the state entities. The visiting team of the lender has also expressed dissatisfaction over the performance of the energy sector and the ballooning circulation debt, local media reported.
Pakistan facing $12 billion external financing gap secured $6 billion bailout package from Saudi Arabia, $3 billion in foreign currency support and $3 billion worth of oil on deferred payments during the visit of Prime Minister Imran Khan.
“The country is now out of balance of payment crisis”, Finance Minister, Asad Umar, announced earlier last week during a press conference held to brief about the recent visit of PM Khan to china.
Though the exact quantum of IMF loan has not been determined, the finance minister last week said that the country may need $5 billion to $6 billion bailout program from the fund.
Economists expect harsh conditions the fund may tag with the program that if implemented would trigger inflationary pressure to large extent.
“These conditions among others will be: More taxes to bridge huge fiscal deficit, drastic cut in expenditures that would may also include development expenses, end of subsidies in power and other sectors, privatization of PSEs and devaluation of national currency”, Dr. Ikram Ul Haq, expert on economic and taxation matters, commented.
Pakistan, after much deliberations, had formally approached the IMF in October 2018 with the request to avail country’s 13th program since 1980s.
The country has also been negotiating with friendly country for financial assistance and was positively responded by Saudi Arabia and China.

Pakistan-IMF policy level talks to start from Tuesday