IMF rep. asks Pakistan to do more as Miftah hints at further fuel price hike

The top International Monetary Fund (IMF) official in Pakistan has asked the country to “do more” to achieve the key targets laid out by the Fund for the resumption of the loan program.

In an exclusive statement to SAMAA TV, IMF’s Resident Representative for Pakistan, Esther Perez Ruiz said the Fund is evaluating the annual budget for the fiscal year 2022-23 presented by the federal government.

The federal government, Friday, tabled the annual budget with a total outlay of Rs9.502 trillion, of which Rs7.4 trillion will be financed by taxes and non-tax revenues.

The budget estimates show that the government intends to collect Rs720 billion in petroleum development levy, a key indication that it would reimpose the levy on petroleum products.

Ruiz said that the talks are underway for further clarity on the revenue and expenditures’ targets estimated by the government.

“IMF is ready to continue its support to stabilize the macroeconomic framework,” Ruiz added.

The statement came after Finance Minister Miftah Ismail said Pakistan will default if the government does not abolish subsidies and raise the prices of petrol and electricity.

In an interview with a private TV channel, the finance minister said without the hike, there would be no agreement with the IMF, adding that without the Fund’s support, the country would default.

Pakistan has sought the IMF’s support as its economy has been hit by crippling national debt, galloping inflation, widening current account deficit, and a plummeting rupee.

However, a major sticking point between the two parties was the costly subsidies — for fuel and electricity — which the IMF wanted to be rescinded in full.

The government, in partial fulfillment of the Fund’s condition, hiked the prices of petrol and diesel by Rs60 in less than a month. However, it is still providing a subsidy, while collecting “zero” tax.

Ismail linked Pakistan’s economic stability to the deal with the IMF, saying that without it, other lenders like the World Bank and Asian Development Bank would not give “even a single penny” to Pakistan.

“I have told the prime minister that we have to take tough decisions. The prime minister is unhappy with increasing the prices of petroleum products. Whenever I send a summary [for price hike], the ministers curse me,” Miftah lamented.