Did not ask Pakistan to renegotiate CPEC energy deals: IMF

The International Monetary Fund (IMF) has not asked Pakistan to renegotiate China Pakistan Economic Corridor (CPEC) independent power producers (IPP) agreements, said Esther Perez Ruiz, IMF’s Resident Representative for Pakistan, in a statement on Thursday.

The statement comes after a media report stated that the lender had asked the government to renegotiate its CPEC energy deals before making payments of around Rs300 billion to Chinese power plants.

The report, citing sources, said the IMF suspected Chinese IPPs might have been overcharging Pakistan.

“These claims are simply untrue,” said Perez.

Perez also said "the IMF supports Pakistan government’s multipronged strategy to restore energy sector viability which shares the burden of restoring viability across all stakeholders — the government, producers, and consumers."

Pakistan is halfway through a $6-billion, 39-month IMF programme that has stalled due to the lender's concerns regarding the status of some of its objectives, including fiscal consolidation.

The next tranche that Pakistan is to receive upon a successful review is $900 million, and a green light from the IMF would also open up other global funding avenues.

Pakistan urgently needs funds in the face of dwindling foreign exchange reserves, which have reached $9.2 billion — enough for less than 45 days of imports.

Earlier, Perez had said that additional measures will be needed to bring Pakistan's budget for fiscal year 2022-23 in line with the key objectives of its IMF programme.

Last week, the federal government unveiled a Rs9.5 trillion budget for 2022-23 aimed at tight fiscal consolidation in a bid to convince the IMF to restart much-needed bailout payments.

"Our preliminary estimate is that additional measures will be needed to strengthen the budget and bring it in line with key programme objectives," Esther Perez Ruiz told Reuters.

Pakistan's Finance Minister Miftah Ismail also said that the IMF had expressed concerns about the budget numbers, including fuel subsidies, a widening current account deficit, and the need to raise more direct taxes.

He, however, added that his government was confident they could adjust the budget to bring the IMF on board and was hopeful of securing a successful review this month.

Earlier this week, Pakistan announced a third hike in the prices of petroleum products in less than three weeks, as it looks to quickly appease the IMF.