Pakistan-IMF agreement: Govt agrees on raising electricity, gas prices

ISLAMABAD: The federal government has agreed to raise prices of electricity and gas as Pakistan and International Monetary Fund (IMF) moved closer to the revival of $7 billion Extended Fund Facility (EFF) stalled for months, ARY News reported on Thursday, citing sources.

According to details, the Fund and Pakistan moved closer to the revival of their loan package as Islamabad has agreed to several conditions including increasing energy prices and improve tax collection, as demanded by the IMF.

Sources told ARY News that the government and the Fund jointly agreed on circular debt management plan, adding that the government has also agreed to increase levy on diesel immediately.

Sources further claimed that IMF has agreed on subsidies for marginalised citizens, adding that the prices of electricity and gas will be increased for others, excluding the marginalised consumers.

Meanwhile, Pakistan will arrange $5 billion from friendly countries as per the agreement, sources said, adding that IMF Executive Board will review Pakistan’s loan programme.

Earlier, it was reported that the talks between Pakistan and the International Monetary Fund (IMF) over revival of stalled $7 billion Extended Fund Facility (EFF) remained successful and a formal announcement will be made shortly.

The development came during a virtual meeting between Prime Minister (PM) Shehbaz Sharif and IMF Mission to discuss the revival of stalled $7 billion Extended Fund Facility (EFF).

Sources told ARY News that the meeting was attended by Finance Minister Ishaq Dar and other officials. The prime minister was apprised of the negotiations with the IMF delegation and its progress.

Sources further claimed that PM Shehbaz Sharif approved the agreement to be singed with the Fund. A formal announcement will be made shortly by Ministry of Finance, they added.

‘Good News soon’

Earlier in the day, Finance Minister Ishaq Dar said that talks with the International Monetary Fund (IMF) are “on track” and matters with the lender related to the loan programme were expected to be settled today.

“We will give you good news very soon,” the finance minister said in a response to a question after addressing a road safety conference in Islamabad.

The finance minister further said, “The final round of talks with IMF is currently underway. I am going to meet the IMF team today”.

READ: IMF DEMANDS RECORDS OF PAKISTAN’S FLOOD RELIEF EXPENDITURES

‘Tough conditions’

International Monetary Fund (IMF) has asked Pakistan to impose roughly Rs600-800 billion in additional taxes in the second round of talks to revive $7 billion Extended Fund Facility (EFF).

During the meeting, the Fund set tough conditions for additional measures that included imposing roughly Rs600-800 billion in additional taxes.

Sources told ARY News that Pakistan was willing to impose taxes to the tune of Rs200 billion through a ‘mini-budget’, while the Fund pressed Islamabad to foist over Rs600 billion additional taxes.

The lender also demanded the government increase tax collection to 1 percent of Gross Domestic Product (GDP). Sources claimed that the Fund demanded the government fix next fiscal year’s tax collection target at Rs8.3 billion.

Sources further claimed that the IMF also demanded to end phase-wise incentives of sales tax. It also demanded to increase sales tax on petrol from 11 percent to 17 percent, sources said, adding that Fund demanded to end Rs110 billion relief granted to textiles and other industries.