IMF presses Pakistan on ‘urgency’ of removing fuel, energy subsidies for loan

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NEW YORK: The International Monetary Fund (IMF) on Wednesday emphasised upon Pakistan the urgency of “removing fuel and energy subsidies” to achieve programme objectives.

Finance Minister Miftah Ismail had earlier this week said he would convey to the IMF that fuel and energy subsidies — which were introduced by the previous PTI government — could not be reversed as the “nation cannot endure it”.

But in a statement issued earlier today, the IMF said it had “emphasised the urgency of concrete policy actions, including in the context of removing fuel and energy subsidies and the FY2023 budget, to achieve program objectives”.

The newly-elected government began talks with the Fund a week ago over the release of a $1 billion tranche under an Extended Fund Facility, a process slowed by concerns about the pace of economic reforms in the country. The talks were held in the Qatari capital Doha.

A $6 billion IMF bailout package signed by former prime minister Imran Khan in 2019 has never been fully implemented because his government reneged on agreements to cut or end some subsidies and to improve revenue and tax collection.

Islamabad has so far received $3bn, with the programme due to end later this year. Officials are seeking an extension to the programme through to June 2023, as well as the release of the next tranche of $1bn.