ISLAMABAD: The International Monetary Fund (IMF) has applauded Pakistan for raising fuel prices, local media reported on Tuesday, as talks continue between Islamabad and the lender for the resumption of a $6 billion bailout program.
The price hike has been the main issue between Pakistan and the IMF as part of an agreement to withdraw subsidies in the oil and power sectors to reduce the fiscal deficit before the annual budget is presented this week. Ousted Prime Minister Imran Khan had given the subsidy in his last days in power to cool down public sentiments in the face of double-digit inflation, a move the IMF said deviated from the terms of the 2019 deal.
Last month the finance ministry raised fuel prices by around 20 percent, and within a week by another 17 percent.
“The IMF appreciates authorities’ efforts toward bringing fuel prices in line with international prices, as part of a wide-ranging set of policies and reforms to repair macroeconomic stability and achieve program objectives,” the IMF’s resident chief in Pakistan, Esther Perez Ruiz, told The News daily.
She added that discussions with Pakistani authorities, aimed at reaching an agreement to enable the conclusion of the pending seventh review of the bailout scheme, were “ongoing and remain very constructive.”
Pakistan is facing tough financial challenges due to a rising current account deficit and depleting forex reserves. Economic experts say the country desperately needs to reach an agreement with the IMF to resume receiving aid from the lender and also potentially unlock other sources of external finances.
Pakistani authorities have also requested the IMF to expand the size of the loan program to $8 billion and increase its tenure to June 2023.
