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IMF agrees to extend its programme for Pakistan with rider
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IANS | 25 Apr, 2022
Pakistan and the International Monetary Fund (IMF) have agreed to extend
the stalled bailout programme of $6 billion by one year and increase
the loan size to at least $8 billion, a step being seen as an important
breathing space for the Shehbaz Sharif-led government.
The
decision was taken after consultations between Pakistan Foreign
Minister Miftah Ismail and IMF Deputy Managing Director Antoionette
Sayeh in Washington.
However, the decision is pending to
completion of some strict and difficult demands, which include
cancelling subsidies on petroleum announced by former premier Imran
Khan. The demands also include increasing energy tariff in order to meet
the demand for the revival and extension of the IMF loan proramme.
"IMF
had asked Pakistan to withdraw fuel and electricity subsidies that
former premier Imran Khan had announced on February 28 in total
disregard for fiscal prudence and to gain the lost support due to
double-digit inflation in the country," sources said.
Subject to
the final modalities, the IMF has agreed that the programme will be
extended by another nine months to one year as against the original
deadline of September 2022.
The previous Imran Khan government
had signed the IMF bailout package worth $6 billion for a period of at
least 39 months in July 2019. But the government failed to fulfil its
commitment and the programme remained stalled for most of the time and
at least $3 billion remained undisbursed.
"Before taking
Pakistan's case to the IMF board for approval, Islamabad would have to
agree on the budget strategy for the next fiscal year 2022-23," said an
official source.
The failures of the previous government have
posed a major challenge for the current government of Prime Minister
Shehbaz Sharif, which will have to demonstrate that it would undo some
wrong decisions taken by the former regime against the commitments that
it gave to the IMF board in January this year.
It is pertinent
to mention here that IMF's two-year extension, coupled with an
additional $2 billion, would bring some clarity in economic policies and
shred some uncertainty from the country's economic woes.
"To
give a final shape to the extended programme, an IMF mission would visit
Pakistan likely from May 10," said an official source.
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