Pakistan surrenders to IMF, agrees to remove subsidies

Pakistan surrenders to IMF, agrees to remove subsidies

KARACHI: Pakistan government has agreed to remove subsidies on various items granted by the previous government in order to continue loan program under International Monetary Fund (IMF).

The IMF issued the following statement on April 24, 2022:

“We had very productive meetings with the Finance Minister of Pakistan Miftah Ismail over Pakistan’s economic developments and policies under the Extended Fund Facility (EFF) program.

“We agreed that prompt action is needed to reverse the unfunded subsidies which have slowed discussions for the 7th review.

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“Based on the constructive discussions with the authorities in Washington, the IMF expects to field a mission to Pakistan in May to resume discussions over policies for completing the 7th EFF review.

“The authorities have also requested the IMF to extend the EFF arrangement through June 2023 as a signal of their commitment to address existing challenges and achieve the program objectives.”

The previous PTI government had announced to provide massive relief to the public by deciding not to increase the petroleum prices and electricity tariff.

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Imran Khan, chairman of Pakistan Tehreek I Insaaf and recently removed from the slot of Prime Minister through a no-confidence vote on February 28, 2022 announced reduction in prices of petroleum products and electricity tariff and further announced to freeze the reduced rates till upcoming federal budget 2022/2023.

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The previous government provided the relief by slashing prices of petroleum and electricity to provide massive relief to the people.

The government is absorbing losses of billions of rupee every month due to subsidies supply of petroleum products and electricity.

The new government, although, retained the prices fixed by the previous government for the fortnight started on April 16, 2022. However, recent development clearly indicated that the present government had agreed to the IMF to withdraw the incentives given to the public of the Pakistan.

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Analysts believed that withdrawal of subsidy will be inflationary.