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ISLAMABAD: The government should immediately initiate discussions with the International Monetary Fund (IMF) to put the Extended Fund Facility (EFF) back on track to ensure pledged releases from other multilaterals and bilaterals to strengthen Pakistan’s foreign exchange reserves.

This was stated by former finance minister Dr Hafeez Pasha while talking to Business Recorder.

Pasha added that opting for a new programme would be time consuming and county cannot afford cessation of project and programme lending from other multilaterals, therefore, there is an emergent need to resume the existing programme. He further stated that the country is in need of dollars to support the balance of payment and foreign exchange reserves and suggested that the government should announce the budget next month that would include taxation measures and withdrawal of tax exemptions as agreed with the Fund in the sixth review.

Pasha further stated that as soon as the existing programme is brought back on track the country would receive a disbursement of$2 billion from the IMF as well as other loans in the pipeline from other multilaterals. Former finance minister also suggested that the government needs to convince the IMF to combine the seventh and eight reviews.

An official in the finance ministry said that the present government may have to scrap the 28 February relief package announced by former Prime Minister as serious concerns were raised by the IMF on the package during discussions with the previous government’s economic team.

SBP’s reserves slip below $11bn

Former Economic Advisor to Finance Ministry, Dr Ashfaque Hasan Khan concurred and stated that revival of existing programme is the only immediate option but stated that for this to happen the government has to increase petrol and electricity prices.

The government’s priority must be to complete the remaining reviews of IMF programme before making up its mind on ‘whether it would take another loan from the IMF after September 2022’, he added.

Khan was optimistic that some leniency may be expected from the IMF with an improvement in relations with the US after the new government assumed power. He said that increase in electricity per unit price by Rs4.95 on account of fuel adjustment at this point in time is a signal to the IMF with regard to initiate negotiations.

Business Recorder sent a text message to Esther Perez Ruiz, Resident Representative of IMF in Pakistan, for her comments however till the filing of this report no response had been received though previously she had stated, “the Fund looks to continue its support to Pakistan and, once a new government is formed, we will engage on policies to promote macroeconomic stability, and enquire about intentions vis-a-vis program engagement.”

Later, she congratulated Shehbaz Sharif on becoming prime minister and stated that the Fund looks forward to working with the government and discussing policies that would support inclusive and sustainable growth.

Copyright Business Recorder, 2022

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