Islamabad: The International Monetary Fund (IMF) has announced its decision to increase the Extended Fund Facility (EFF) package to USD 8 billion from USD 6 billion for Pakistan, news sources reported on April 25.
The fund will now provide Pakistan USD 5 billion instead of 3 billion with a time extension of one year for the loan programme. The news came as a result of meetings in Washington between the IMF and Pakistan’s Finance Minister Miftah Ismail. It was revealed that the government had requested IMF to extend the programme’s duration and loan amount in order to solve the mounting fiscal imbalance and balance of payment difficulties.
Minister Miftah stated that a staff-level delegation of IMF will visit Pakistan next month to evaluate fiscal strategies to realise the EFF loan deal and release the next tranche of USD 1 billion. He also stated that the IMF is adamant about eliminating government subsidies for gasoline and energy to make the talks more successful. In this regard, the finance minister stated that the government will eliminate subsidies in phases in order to alleviate the burden on ordinary people, but no subsidies will be granted to enterprises or the upper class. He also stated that the government will not reverse the autonomy of the State Bank of Pakistan (SBP) as previously agreed upon by the IMF and the Pakistani government.
It is worth noting that Pakistan and the IMF agreed on an EFF bailout loan of USD 6 billion in 2018, spanning a three-year period. IMF had asked the government to reform its fiscal policies, including the tax collecting method, the elimination of subsidies, the reduction of import bills, and the expansion of the tax net for the implementation of the programme. The government has already addressed a lot of issues; however, the third trench, worth USD 1 billion, has been delayed owing to government subsidies on gasoline, power, and corporate amnesty initiatives.
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