Bank loan

Pakistan fails to convince World Bank and IMF to take over extended $ 6 billion loan facility, South Asia News

The Pakistani delegation which had been in Washington since October 4 to attend the annual meetings of the World Bank and the International Monetary Fund (IMF), failed to convince the latter and to find an arrangement for the resumption of a facility. extended loan of $ 6 billion.

The high-level delegation, led by then-finance minister and current prime minister’s finance adviser Shaukat Tarin, finance secretary Yousaf Khan, state bank governor Raza Baqir and other senior officials officials, had extensive discussions with the IMF.

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However, the proposal and plan for economic reform, which the delegation presented to the IMF, did not convince them to take over the Extended Financing Facility (EFF).

It was later revealed that the IMF would issue a statement explaining how the fund’s economic reform program, which includes the $ 6 billion loan, could be revived.

Pakistani government officials maintain talks with the IMF are still ongoing, expressing hope that it will announce the resumption of the program.

Pakistan was made easier by the $ 6 billion bailout in May 2019, when the country struck a deal with the IMF after difficult negotiations.

The 39-month bailout program places strict obligations on Pakistan to ensure increased tax collection and economic reforms, which the IMF’s review is part of the mutual understanding.

The agreement calls for reducing domestic and external imbalances, removing obstacles to growth, increasing transparency and strengthening social spending.

The bailout deal was suspended in January 2020, when the government led by Imran Khan refrained from raising taxes on electricity and also added additional taxes.

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According to the sources, the IMF expects Pakistan to increase at least PKR 4.95 per unit per unit of electricity and impose taxes worth PKR 150 billion.

On the other hand, the Pakistani government maintains that increasing tariffs and taxes would only increase inflation in the country, which is already damaging the reputation of the government as the livelihoods of locals are struggling. worse.

However, the IMF reminded Pakistan of the terms and conditions it agreed to in the original 2019 deal, which was backed by its ambitious three-year macroeconomic and structural reform program.

Inflation in Pakistan takes a heavy toll on the lives of locals as a household income has fallen by at least 35% while the cost of living with basic food and shelter facilities has increased by 40 to 50%.

The recent increase in fuel prices, followed by increases in unit prices for electricity and gas, has now started to undermine public support for Prime Minister Imran Khan.

Experts say the damage may show its effects against the government of the day in the next general election.

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