Pakistan Economy News: Putting further pressure on the already troubled Pakistani economy, the International Monetary Fund (IMF) has rejected Pakistan’s Circular Debt Management Plan (CDMP). Additionally, the international financial organization has urged the Pakistani government to increase the price of energy between PKR 11 and PKR 12.50 per unit to cap additional subsidies of PKR 335 billion for the current fiscal year.
Discussions have taken place between the IMF and Pakistan to conclude the ongoing 9th review under the $7 billion Extended Fund Facility (EFF).
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The IMF has termed Pakistan’s updated CDMP as ‘unrealistic’, based on certain misconceptions. To limit losses in the electricity industry, the Pakistani government will need to revise its Recommended Action. Circular lending was originally expected to be Rs 1,526 billion, but the revised CDMP has called for an increase of Rs. 952 billion for the current financial year. On Wednesday, the Pakistani government provided the IMF with its updated CDMP.
The revised CDMP for the Pakistani government also showed that the government still needed an additional $675 billion in subsidies, despite a substantial increase in electricity prices. The IMF has also questioned this and asked how the Pakistani government arrived at its estimate of additional subsidy demand. The updated CDMP seeks capping the disco losses at an average of 16.27% for the current financial year.
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Reportedly, the Pakistani government is expected to collect deferred fuel price adjustment (FPA) charges to bring in $20 billion as against the forecast of $65 billion made last summer.
frequently Asked question.
1- Why does Pakistan continuously ask for loan from IMF?
Pakistan is seeking a loan from the IMF as it is finding it difficult to get money to pay off imports and debts.
2- Why did the IMF term the Pakistani CDMP as ‘unrealistic’?
The Pakistani CDMP was labeled “unrealistic” by the IMF because it was allegedly based on incorrect assumptions.