A Lengthy Agreement With IMF: $600 Billion Over 3 Years
- Pakistan to receive $6 billion over three years
- Islamabad to also receive $2-3bn from World Bank, Asian Development Bank, etc.
- Finance adviser hints at raising prices in some areas "to recover costs"
- Decisive policies and reforms necessary for growth: IMF
- IMF says 'market-determined exchange rate' to help the financial sector
The Government's Teams and the International Monetary Fund (IMF) agreed on a Pakistan bailout package, announced on Sunday by Prime Minister Advisor for financial, revenue and economic affairs Dr Abdul Hafeez Shaikh.
"After months of discussions and negotiations, a staff-level agreement has been reached between Pakistan and the IMF," he said.
Dr Shaikh opens that Pakistan would receive $6 billion worth of assistance under the IMF programmed for more than three years.
He said that the agreement with the IMF board of directors in Washington still has to approve that would prove effective reforms in Pakistan.
“The Pakistani authorities and the IMF team have reached a staff-level agreement on economic policies that could be supported by a 39-month Extended Fund Arrangement (EFF) for about US $6 billion," an IMF press release quoted IMF Mission Chief for Pakistan Ernesto Ramirez Rigo as saying.
Dr Shaikh says that the IMF is a global institution whose primary task is to support the "economic difficulty" Member States. He said the government could not overcome the $ 12 billion financial gap alone, which was the result of a weak economy.
He also revealed that other than the IMF, the government will also seek economic help worth nearly $ 2-3 billion from World Bank and Asian Development Bank.
On asking about the condition that Pakistan agreed on as part of the agreement, Dr Shaikh said there were many things desired by the Fund that government already had seen in favour of Pakistan; These include a balance between resources and expenditures, improving the workings of state-owned loss-making companies, reducing grants available to the wealthy and taxing rich segments.
"These structural changes are in our interest if we want to take our people in the direction of prosperity and improve their quality of life," he said.
He explains that "However the government is focused on not putting too much burden on the common man,", that if power tariff is increased under the IMF programmed, it will not affect consumers utilizing less than 300 units, "and this includes 75pc of electricity consumers". For the same reason, the government is allocating an additional Rs50 billion for an electricity subsidy in the upcoming budget.
The government also allocates Rs80 billion additional to social security programs such as Ehsaas and the Income Support Program to minimize the burden of the ordinary man, said the Advisor.
In the Past:
The finance ministry had moved towards the IMF in August 2018 for a bailout package, however last month, the then finance minister Asad Umar announced that the two sides had somehow reached a mutual agreement to bring out the country’s ailing economy.
“In the next step, the IMF will send its mission to Pakistan in the next few weeks to work out technical details. But in principle, we have reached an agreement,” Asad Umer had said before being dramatically removed from the post and replaced by DR Shaikh who is an internationally renowned economist.
Later, an IMF employee, Dr Reza Baqir, was appointed the governor of the State Bank of Pakistan for a three-year term.
Source: Dawn News