ISLAMABAD (Eshfak Mughal):- The International Monetary Fund (IMF) has imposed prior condition for eliminating the government’s role in determining the prices of petroleum products to avail tranche of $1.17 billion loan in August
Sources in the IMF told that Pakistan and Fund has been reached an agreement at staff level talks last week. Despite that Pakistan government has to implement on some prior actions before expected meeting of the Executive Board in last week of next month, they elaborated.
Pakistan has to formulate a pricing mechanism of petroleum products in which there must be no role of government to avail tranche of $1.17 billion loan program.
It is important to mention here that Pakistan government fixes petroleum prices fortnightly basis.
Pakistan cannot afford to delay the implementation of the prior conditions as the Board meeting will approve the staff level agreement only after the implementation of these conditions, they said.
Devising an automatic price fixation system of petroleum products is main prior action for revival of the loan program. Pakistan government has also to implement the condition to enforce 17 percent sales tax and petroleum levy by Rs.50/ litter for revival of stalled loan program, sources said.
The government has also implementation of NEPRA decisions without delay regarding fuel adjustment and increase the electricity tariff. It is important to mention here that Pakistan government has promised to increase the electricity rate from Rs17 per unit to Rs25/unite in phase manner, the sources further said.
The IMF believes that Pakistan violated the agreements and deviated from policy initiatives in the past. After February 2022,the IMF program ran into problems due to non-compliance by the Pakistan government.
It is important to mention here that previous government led by former prime minister Imran kHan has announced subsidy on electricity and petroleum prices on Feb to gain political gains amid no-confidence motion against him.
The IMF officials think that the three-month delay in reforms has severely damaged to the economy, sources further stated.
While answering a question regarding political uncertainty and future of current regime, the sources said that IMF has no objection to talks with caretaker government in Pakistan, IMF sources.
They said that Pakistan may receive fund from loan quota of Saudi Arabia. Saudi Arabia may transfer its IMF loan quota to Pakistan, sources confirmed.
Every country has quota of loan and there are such examples of transferring quota by mutually understanding.
IMF has grave concerns on the accountability system in the country. The sources said that the Fund has told Pakistani government that it is important to review the accountability laws and organizations for improvement in governance. The provincial anti-corruption departments of the country also need to be made more effective, the IMF believes.
Regarding a query, the sources said that the Fund told govt that it has no option to spent unbudgeted subsidy like last year. The government has allocated Rs700 billion for subsidy and it has to stay within allocated amount to revive the IMF loan program, they said.