The International Monetary Fund’s (IMF) resident representative for Pakistan Esther Perez Ruiz has stated that the government’s recent decision to extend a cross-subsidy for fuel was made without consulting with the IMF.
It was reported by Bloomberg that the statement came from IMF’s key official two days after Prime Minister Shahbaz Sharif announced a “petroleum relief package” for low-income people, warranting a Rs 50 subsidy per litre of petrol for low-income individuals. The subsidy was doubled to Rs 100 the next day, for motorcycle and small car (up to 800cc) owners.
The announcement of the relief package was made a few days after the government increased the petrol price by Rs5, to Rs272 per litre, succumbing to the IMF’s demands.
Ruiz disclosed that “Fund staff are seeking greater details on the scheme in terms of its operation, cost, targeting, protections against fraud and abuse, and offsetting measures, and will carefully discuss these elements with the authorities,” adding that Pakistan has made “substantial progress” towards meeting policy commitments needed to unlock the critical IMF funding. However, Pakistan is required to meet a few more conditions, before it can secure the loan and circumvent the looming threat of default.
“A staff-level agreement will follow once the few remaining points are closed,” Ruiz elaborated. “Ensuring there is sufficient financing to support the authorities in the implementation of their policy agenda is the paramount priority.”
Well, that is one thing, not just the IMF, but the entire country is concerned about.
Moreover, another delay in the funding, as communicated by the Finance Minister Ishaq Dar, was the IMF’s wish to see countries fulfil the pledges they have made to assist Pakistan in bolstering its finances, before approving the bailout package.