There is a ray of hope for Pakistan, which has sunk into the quagmire of debt. The International Monetary Fund (IMF) has agreed to extend the stalled relief package by one year. Also, the existing loan will be increased by another two billion dollars. If reports are to be believed, this decision is expected to give relief to the new government headed by Prime Minister Shahbaz Sharif.
The agreement was reached after talks in Washington between Pakistan's new Finance Minister Miftah Ismail and IMF Deputy Managing Director Antoinette Saih.
Relief package period extended by one year
The IMF agreed that the period of the relief package will be increased from 9 months to one year. Apart from this, the loan will now increase from $ 6 billion to $ 8 billion. The meeting with the IMF team was attended by Minister of State for Finance Dr. Ayesha Ghaus Pasha, current State Bank Governor Dr. Reza Bakir, Finance Secretary Hamid Yakub Sheikh, and World Bank Executive Director of Pakistan Naveed Kamran Baloch.
IMF had laid the conditions
The IMF had stopped the $6 billion relief package because of the Imran Khan government. A list of 5 conditions was given for giving a loan. The IMF had made it clear that until Pakistan does not fulfill the conditions of its economic recovery, it will not get a single installment of the loan of $ 6 billion. The conditions put by the IMF on the Government of Pakistan included bringing the State Bank of Pakistan Amendment Bill, canceling tax exemptions, and freeing the State Bank of Pakistan from government interference.
The agreement was signed by the Imran government in 2019
The Pakistan Tehreek-e-Insaf (PTI) government and the IMF had signed a 39-month Extended Fund Facility (July 2019 to September 2022) of the USD 6 billion packages. However, the government failed to accomplish this. This relief package was stalled for most of the time, as $3 billion was not paid.
Pakistan will have to do this work for loan approval
Before getting the approval of the IMF, the Government of Pakistan has to show that it is honest in taking the necessary tough policy decisions. The IMF had asked Pakistan to withdraw fuel and electricity subsidies, which were announced by former Prime Minister Imran Khan on February 28, to regain lost support.
Finance Minister Ismail recently said that the government is giving a subsidy of Rs 21 per liter on petrol and Rs 51.54 per liter on high-speed diesel. These subsidies will have to be withdrawn for approval. According to the information, before the approval, a team of IMF will visit Pakistan on 10 May.
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