islamabadAs part of austerity measures needed to gain International Monetary Fund approval for economic relief, the Pakistan government, apart from reducing non-salary, non-essential civilian and security costs, will allow large export industries to expand, Dawn reported. May withdraw energy subsidy. ,
According to a news report, senior government officials said that IMF mission chief to Pakistan Nathan Porter has reached Islamabad to hold technical discussions with officials. Technical discussions between the IMF and the Government of Pakistan will continue until Friday, 3 February.
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Besides, the second phase of policy talks will continue till February 9 to finalize a memorandum of economic and financial policies. Dawn cited an official as saying that the government’s attempt to secure an arrangement with the IMF has already burdened the majority of the population with a massive fiscal adjustment based on their ability to pay.
According to the official, development means that all sections of society, including the middle class, civil administration, armed forces and judiciary, have to give up a lifestyle that is no longer sustainable.
According to the Dawn report, the officials acknowledged that around 30 per cent of the people were already below the poverty line and were being taken care of through various social sector assistance programmes. Meanwhile, 22-25 per cent of the population is most vulnerable to the inflationary spiral. According to the news report, the authorities will have to announce stronger measures and start implementing them. The measures will lay out a road map along with measures to address a circular debt of more than Pakistani Rupees (PKR) 2.5 trillion in the power sector, cut expenditure, and tax to bridge the PKR Rupees 2-2.5 trillion fiscal hole The measures will be based on how the IMF and the Government of Pakistan establish a consensus.
The measures could include a significant reduction in the size of the cabinet and withdrawal of all untargeted and non-budgetary subsidies, in particular energy subsidies to exporters announced four months ago without budget allocations, to show political commitment. PKR 120 Billion.
The Pakistani government has already surrendered the exchange rate cap, allowing the PKR to depreciate more than 40 per dollar in less than a week. The government of Pakistan also increased the policy rate by one percentage point to 17 percent to allow the IMF to deploy its staff mission to complete negotiations on the 9th Quarter Review.
On 19 January, the government of Pakistan formally expressed its readiness to accept all of the IMF’s terms and urged the mission to visit Islamabad for talks on the USD 3 billion loan as part of the program to avoid sovereign default. Is.
The IMF has said that its mission will “focus on policies to restore domestic and external stability,” including strengthening fiscal positions with durable and high-quality measures and supporting those affected by floods and the power sector. involves restoring viability. ,
In addition, the IMF stated that it would re-establish the proper functioning of the foreign exchange market, enabling the exchange rate to address FX shortfalls. As per news reports, Pakistan needs USD 8-9 billion during the remaining five months of the current financial year to meet international obligations.