ISLAMABAD: The International Monetary Fund’s (IMF) resident representative for Pakistan said on Monday that the Fund was not consulted on the government’s recent move to announce a fuel subsidy of Rs.50 per liter, adding that it is seeking “greater details” on the scheme, Bloomberg reported.
Pakistan has hiked taxes, shifted to a market-based exchange rate, and increased fuel prices to revive a stalled $6.5 billion IMF loan program as the prospect of default looms large over the South Asian country. As Pakistan’s currency weakened and its reserves dipped to historic lows over the past couple of months, inflation more than doubled to 31.5 percent in February this year, making it difficult for low-income Pakistanis to make ends meet.
Despite Pakistan’s efforts to seek a bailout program from the international lender, Prime Minister Shehbaz Sharif on Sunday announced a “petroleum relief package” for low-income people. The announcement of the relief package came days after the government increased the petrol price by Rs5 per liter, taking it to Rs272 per liter.
“Ruiz said the lender wasn’t consulted on the government’s plan to raise fuel prices for wealthier motorist to finance a subsidy for lower-income people,” Bloomberg said in a report.
“Fund staff are seeking greater details on the scheme in terms of its operation, cost, targeting, protections against fraud and abuse, and offsetting measures, and will carefully discuss these elements with the authorities,” Bloomberg quoted her as saying.
On the staff-level agreement, Ruiz said Islamabad had made “substantial progress” toward meeting policy commitments.
“A staff-level agreement will follow once the few remaining points are closed,” she told Bloomberg. “Ensuring there is sufficient financing to support the authorities in the implementation of their policy agenda is the paramount priority.”
Finance Minister Ishaq Dar said the IMF agreement has been delayed as the Fund wanted to see “friendly countries” finalize commitments they made to help Pakistan shore up its reserves before signing off on the bailout package.
