IMF $3 billion loan subject to removal of fuel subsidies

Doha: Negotiations between the government and the International Monetary Fund (IMF) have concluded, and the IMF has subjected the $3 billion economic relief program for Pakistan with the removal of fuel subsidies.

The Pakistani delegation failed to convince the IMF, as both sides could not reach a staff-level agreement despite week-long negotiations in Doha, Qatar, from May 18-25.

According to sources, IMF has refused to issue loans to Pakistan until they remove all subsidies on fuel prices in the country.  The issue of the $3 billion economic relief program to the Pakistani government has been linked to the removal of subsidies over fuel prices.

Pakistan is looking for the release of $3 billion from the IMF. That amount would augment the nation’s foreign-exchange reserves, which at $10.2 billion covers less than two months of imports. The government is staring at a $45 billion trade deficit this year.

The revival was expected to bring stability to the financial markets, the fast-weakening Pakistani rupee, and the depleting foreign exchange reserves, as the government had pinned hopes on the programme’s resumption.

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Following the conclusion of the talks, IMF Mission Chief for Pakistan, Nathan Porter, said the Fund held constructive discussions with the Pakistani officials, which aimed at reaching an agreement on policies and reforms.