Remove petroleum subsidies: IMF asks cash-strapped Pakistan
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Late Wednesday, the International Monetary Fund (IMF) postponed the resumption of Pakistan's stalled $6 billion External Financing Facility (EFF) programme.
Inflation is on the rise. Disputes over the price of petrol A tumultuous political climate Pakistan has been struggling to keep its economy afloat for months, raising the possibility that one of the world's most populous countries will soon follow Sri Lanka into a wave of worldwide defaults.
Investors are becoming jittery. Pakistan may default for the second time in its history if it does not receive a bailout from the International Monetary Fund. Officials concede that getting a loan from the IMF may require trade-offs, including the politically difficult choice of raising fuel prices, as talks with the multilateral lender come to a close Wednesday in Doha.
As rising political turmoil puts pressure on Shehbaz Sharif's new government, Pakistan's foreign minister expressed hope that the country might renegotiate a deal with the IMF in response to the rise in global food and fuel prices.
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Officials are in talks with the IMF to restart loans under a $6 billion loan deal approved in 2019 but stalled due to a dispute with the previous administration over energy subsidies. Pakistan is experiencing a shortfall in foreign reserves, prompting some analysts to worry that the country could default on its foreign commitments.
Meanwhile, the International Monetary Fund (IMF) emphasised to Pakistan on Wednesday the importance of "removing fuel and energy subsidies" in order to meet programme goals.
The IMF said earlier this week that he would inform the IMF that the previous PTI government's fuel and energy subsidies could not be reversed because the "country cannot bear it."
The IMF, on the other hand, said it had "emphasised the urgency of tangible policy initiatives, including in the context of reducing fuel and energy subsidies and the FY2023 budget, to accomplish programme objectives" in a statement released earlier today.
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