Pakistan faces IMF's toughest conditions for bailout package
Last updated on: 21 November,2018 12:26 pm
The Mission also demanded the PTI government to increase interest rate more than 1 percent.
ISLAMABAD (Dunya News) – Pakistan is facing toughest conditions of the history by the International Monetary Fund (IMF) for bailout package.
Sources said that the IMF demanded the government to increase General Sales Tax (GST) to 18 percent and also asked the government to withdraw subsidy in phases.
The Mission also demanded the PTI government to increase interest rate more than 1 percent.
It asked the government to make State Bank, Oil and Gas Regulatory Authority (OGRA) and National Electric Power Regulatory Authority (NEPRA) independent.
The IMF further demanded the government to crackdown against tax evaders and also asked to slash line losses of the electricity.
Govt decides to withdraw Rs146bn subsidy on power
On November 3, the government while bowing to the pressure of International Monetary Fund (IMF) had decided to withdraw Rs146 billion subsidy on power being given to the domestic consumers.
Sources told Dunya News that the government directed the distribution companies to chalk out a uniform power tariff for domestic consumers of different categories. A petition seeking the determination of power tariff has also been sent to the National Electric Power Regulatory Authority (NEPRA).
Read More: Govt bows down to IMF demand, decides to withdraw Rs146bn subsidy on power
The tariff for the consumers consuming up to 50 units per month had been sought to be determined at Rs2 per unit while the Rs5.7 tariff has been sought for consumers consuming up to 100 units every month.
The power tariff for consumers using 100 to 200 units every month has been recommended at Rs8.11 while tariff for the consumers using electricity from 200 to 300 units per month has been sought at Rs10.70 per unit.
The tariff for consumers using 300 to 700 units per month would go up to Rs17.07 per unit and consumers using more than 700 units per month would have to pay Rs20.70 for per unit power.
The petition for tariff determination will be heard by the regulatory body on November 26.
Economic Challenges
The cash-strapped Pakistani government led by Prime Minister Imran Khan is facing grave economic challenges as it struggles to keep the economy afloat.
Pakistan was facing a $12 billion financing gap for the current fiscal year. Umar told a press conference late on November 6 that Saudi Arabia had already committed $6 billion and another $6 billion would come from China.
Last month, Saudi Arabia said it would provide Pakistan with a USD 6 billion rescue package, but officials have said it is not enough, and Islamabad still plans to seek a bailout from the International Monetary Fund (IMF).
Pakistan had formally approached the IMF in October for loans.
Chinese leaders pledged to help Pakistan during Prime Minister Imran Khan s visit to Beijing last week. Details of the Chinese assistance are still under negotiation.
Pakistan s current account deficit widened by 43 percent to $18 billion in the last fiscal year and its budget deficit has ballooned to 6.6 percent of economic output, creating a financial crunch that economists say will require IMF intervention to overcome.