IMF talks to continue as PM Khan rejects draft agreement

The deadlock was reached over interest rates and further devaluation of rupee against US dollar.

ISLAMABAD (Dunya News) – Talks between Pakistan and the International Monetary Fund (IMF) are scheduled to continue on Sunday as Prime Minister (PM) Imran Khan has rejected the earlier staff-level draft agreement over ‘strict terms and conditions.’

According to sources, Pakistan has accepted many of the demands, including flexible exchange rate regime, withdrawal of subsidies, containing borrowings from the central bank and reinitiating the privatisation programme.

However, the deadlock was reached over interest rates and further devaluation of rupee against the US dollar.

“We have made good progress in our discussions with the visiting IMF Mission. Consultations will continue over the weekend,” said Dr Khaqan Hasan Najeeb, the spokesman of the Finance Ministry.

Earlier, PM Imran Khan expressed reservations over massive additional taxes burden that the nation will bear from July this year, provided both sides reach an agreement.

In this regard, the PM has summoned an important meeting on Monday to examine financial affairs, the tax amnesty scheme and the IMF deal. Several members of the federal cabinet will also attend the meeting.

According to sources, the premier seeks soft terms and conditions from the IMF regarding inflation, particularly relaxation in a larger tax rebates and exemptions.

Moreover, PM Khan has directed concerned officials to persuade the IMF for a reduced tax collection target.

Earlier, the prime minister had held two meetings with Adviser on Finance and Economic Affairs Dr Abdul Hafiz Sheikh, in which the latter briefed the former about the IMF deal.

Contrarily, the government has accepted several demands of the IMF, including the increase in electricity and gas prices in the country.

As per details, the consumers would pay Rs340 billion in three years on account of electricity and gas. The government has also agreed to make the National Electric Power Regulatory Authority (NEPRA) and the Oil and Gas Regulatory Authority (OGRA) autonomous in setting the prices of electricity and gas.

New taxes amounting to Rs700 billion would also be revealed in the budget for the next fiscal year, to be announced on June 11.

Besides, Pakistan’s talks with the IMF, which were to be wrapped up by May 10, will continue over the weekend, rejecting earlier speculations that Pakistan was ready to sign the deal.

In a late-night message, the finance ministry said only that “we have made good progress in our discussions with the visiting IMF mission. Consultations will continue over the weekend.”

Finance ministry spokesperson told the media that more time was required [for the bailout], and expressed hope that the situation would be clearer on Monday.

It is pertinent to mention that the prime minister had last month asked Asad Umar to resign from the finance minister’s post.

Following the ouster of Asad Umar from the federal cabinet, the government appointed Abdul Hafeez Shaikh, a finance expert known for connections in the IMF and other international institutions, as the prime minister’s adviser on finance.

Meanwhile, in a recent reshuffle, the government removed the State Bank governor and the Federal Board of Revenue (FBR) chairman primarily for “failing to produce to the desired results”.

On Sunday, Special Assistant to Prime Minister on Information and Broadcasting Dr Firdous Ashiq Awan had said Dr Reza Baqir, an IMF staffer, had resigned from the international money lending institution for serving Pakistan.

“We welcome Reza Baqir as Governor State Bank of Pakistan. He has come to support Prime Minister Imran Khan on the economic front,” Dr Firdous Ashiq Awan had said while talking to media in Islamabad. “In Naya Pakistan of Imran Khan, talent is valued.”