Pakistan, IMF reach agreement on bailout terms and conditions: Sheikh
Advisor to Prime Minister on Finance, Revenue and Economic Affairs, Abdul Hafeez Sheikh announced on Sunday the terms and conditions mutually agreed upon between the International Monetary Fund (IMF) and the Government of Pakistan, ARY News reported.
Talking in a program of state-run Pakistan Television (PTV), he said that a board consisting of members of the IMF would now authorize the finalization of the agreement.
Pakistan has lost 50 percent of its reserves in the last 2 years; last year the export and import differential was worth $20 billion, added the PM’s advisor.
Sheikh then elaborated on IMF’s role in helping member countries during times of economic turmoil.
“We will be getting $6 billion from the IMF in 3 years, we see great advantages in reaching out to the global financial body,” revealed Sheikh.
Talking about the impending circular debt the country has to contend with, Sheikh said: “If we receive an additional $2-3 billion on a lower interest rate, that could ease up the vice of the circular debt.”
Abdul Hafeez Sheikh said that if subsidies handed out to the elite of the country were halted, the advantages would be reaped by Pakistan and the act will be in the wider national interest.
“If we tax the rich heavily, the country will improve its economic condition, there are a lot of things that have not been focused on by previous governments,” claimed Sheikh.
“Pakistan’s total debt has crept past the $90 billion mark”, he added.
Expanding upon the terms and conditions of the agreement, Sheikh said that, “the agreement is open to structural changes and this would help the country achieve a solid base for economic prosperity.”
“IMF will award a total of $6 billion to Pakistan.”
Touching upon the economic implications a common citizen might face after the loan is received, Hafeez said: “If prices of electricity see an increase, then a user consuming 300 or less units will not be effected by any new taxes that might be imposed, 75 percent of electricity consumers in the country use 300 units or less.”
“We have spent surplus money in a few sectors thus far, we are hopeful to receive and additional grant worth $2-3 billion from the Asian Development bank.”
He also announced allocation of an additional Rs. 50 billion as subsidy to be provided on electricity, and an additional Rs. 180 billion that have been approved for the social safety net.
“The government’s ‘Ehsas’ program is a part of the social safety net,” Shiekh said.
Expressing resolve for the future Hafeez said: “if a concrete development platform is laid out moving forwards then this may end up being the final IMF program for Pakistan.”
“Those earning lower wages will be given special relief, subsidy for the rich must be abolished,” Sheikh stressed.
“Pakistan must undergo an economic overhaul and basic structural changes to bring it on the track of economic progress and prosperity, a prices of a few things shall be increased, increased electricity tariffs will not affect the lower and lower middle strata of the populace,” Shiekh assured.
He also announced a subsidy of Rs. 216 billion for the consumers that use 300 or less units.