IMF puts harsh conditions for resumption of loan programme

No agreement on electricity, gas price: Wants withdrawal of tax holiday facility: Asks Pakistan govt to get rid of circular debt and raise tax collection to Rs6 trillion 

By: News Desk      Published: 12:01 PM, 18 Oct, 2021
IMF puts harsh conditions for resumption of loan programme
File photo.

A deadlock persists between Pakistan and International Monetary Fund as the global lender has put forward harsh conditions for the release of stalled loan programme asking Islamabad to undo unnecessary tax holiday facility and raise the tax collection to Rs6,000 billion, reported 24NewsHD TV channel.

Sources divulged to the 24NewsHD on Monday that talks between the IMF and Pakistan were not going in a smooth way as the Fund wanted the abolition of unnecessary tax holidays and it also imposed a condition to raise tax revenue to Rs6 trillion 

Sources said that the technical teams of both sides failed to build consensus on gas and electricity prices. The Fund put a condition asking Pakistan to get rid of the circular debt. The teams will also discuss privatization of government-owned entities.

According to finance ministry spokesperson Muzzammil Aslam, the talks between the two would resume later today. 

The treasury secretary and his team are still in Washington for holding dialogue with the Fund’s officials. 

The spokesperson eschewed giving any final date for the conclusion of the talks. He, however, proclaimed that talks with the global loan agency would be going on until these are successful.

The erstwhile finance minister and now PM Advisor on Finance and Revenue Shaukat Tarin and State Bank Governor Reza Baqir are busy holding meetings in New York as per the schedule. 

A day ago, on October 17, the Ministry of Finance spokesperson had rejected the news that dialogue with the international monetary organisation had ended in failure. 

Muzzammal also claimed that earlier the government was imposing high taxes but now it had revisited its plan and settled down for lesser taxes.

Earlier, the fresh round of talks between Pakistan and the International Monetary Fund, which began on October 4, for the release of $1 billion loan tranche and a good economic certificate to the nation had remained inconclusive.

The talks had failed to reach a policy-level agreement because of differences over the macroeconomic framework and uncertainty over the future of Pakistan's economy.

Mr Tarin who led the Pakistani delegation into the talks with IMF Managing Director Kristalina Georgieva could not succeed in persuading the IMF chief regarding the economic steps taken by the Pakistani government.

According to sources, the IMF team wanted the Pakistani government to introduce more taxes. The Fund team had already shot down Tarin’s proposal of not withdrawing the subsidies, the sources added.

Reporter Waqas Azeem