ISLAMABAD– The federal government and the International Monetary Fund (IMF) made a visible move on Friday in mutual discussions over a bailout package agreement, the Ministry of Finance said in a statement Friday.
The two sides held talks in the federal capital, after which the Finance Ministry said they had made “good progress” in their discussions. “Consultations will continue over the weekend,” it added.
Pakistan and IMF were reportedly close to finalising a staff-level agreement expected to range between $6-7 billion.
Under the proposed bailout agreement, Pakistan would have no choice but to concede to the IMF’s demands to hike power tariffs and taxes and withdraw tax concessions and exemptions – which are among the conditions that the country has accepted to secure the loan.
According to the ministry sources, the government would increase the costs of electricity and gas for the consumers in two phases within this year.
New taxes amounting to Rs700 billion would be revealed in the budget for the next fiscal year, to be announced on June 11.
Budget deficit would be restricted to 4.5 percent, whereas the revenue target for the Federal Board of Revenue would be set at around Rs5.3 trillion. Interest rate would be brought up to 12 percent.
Under the proposed agreement, the government would not control the rate of the dollar, and subsidies in the energy sector as well as other sectors would be withdrawn.
Furthermore, the plan to privatise institutions incurring losses would be shared with the IMF.
The IMF and the Finance Ministry would release a joint press statement if the agreement is finalised and in case of opposite both the sides would issue separate press releases, officials claim.
SOURCE: APP AND LM REPORT