KARACHI: Pakistani authorities are in close contact with officials of the International Monetary Fund to arrive at an understanding on the issues of taxation and power tariffs so that a $6 billion loan program can be resumed, officials privy to the discussions said.
The IMF agreed to a three-year rescue package last year — its 13th bailout program for Pakistan since the late 1980s — as the South Asian country wrestled with a balance-of-payments crisis.
So far, the country has managed to secure $1.44 billion under the loan program. Pakistan was hoping to receive another tranche of about $450 million around March 2020 but the IMF’s second quarterly review remains inconclusive.
“We are trying to reach an understanding on the best way forward on two main matters: power tariffs and taxation,” Kamran Ali Afzal, spokesperson of Pakistan’s finance ministry, told Arab News last week.
Asked if these issues were the sticking points that had prevented conclusive negotiations between the two sides, he said he preferred to call them “points of focus” instead.
IMF officials said they were working with Pakistani authorities to bring the second review to a “positive conclusion.”
“The IMF team and the Pakistani authorities remain closely engaged with a view to bring the second review of the EFF [Extended Fund Facility] to a positive conclusion,” Teresa Dabán Sanchez, the Fund’s representative in Pakistan, told Arab News on Saturday.
Independent analysts familiar with the developments said more discussions between the two sides were required to iron out details.
“Of course, the two elements are very important: the first is the power sector reform and within the power sector reforms the IMF would like to see stronger implementation of the power sector reform agenda which has already been promised in an April  report,” Dr. Vaqar Ahmed, joint executive director of the Sustainable Development Policy Institute (SDPI), told Arab News. “The Fund would also like a stronger resolve toward addressing the circular debt which has been growing during the pandemic as well.”
Pakistani officials also said the two sides were focusing on policies and structural reforms, expressing confidence that the consultations were progressing well.
“We are in constant consultation with the IMF regarding macroeconomic policies and structural reforms. These consultations are certainly not inconclusive … They are progressing,” Afzal said, adding that “these are different from negotiations with the review mission.”
Dismissing the perception that negotiations with the IMF were taking too long, the finance ministry official said the talks were taking place under unprecedented circumstances.
“It is not taking too long. We are functioning under circumstances of unprecedented uncertainty created by the COVID-19 pandemic … The IMF is helping and supporting Pakistan wholeheartedly like a true friend and partner,” Afzal added.
Pakistan in April 2020 had received $1.39 billion from the IMF under the Rapid Financing Instrument (RFI) to meet balance-of-payments needs stemming from the outbreak of the coronavirus pandemic.
In June this year, Dr. Abdul Hafeez Shaikh, the prime minister’s special adviser on finance, told Arab News that Pakistan would seek to factor the economic impact of the coronavirus pandemic into the targets of its IMF bailout program.
“While the IMF would like to see relatively more ambitious revenue targets going forward there are some other reforms on the table,” SDPI’s Ahmed said, “as well including the public administration on the civil service at the Federal Board of Revenue.”