KARACHI: Talks between the International Monetary Fund (IMF) and Pakistan will resume today, as the two sides look to reach an agreement for the revival $7 billion Extended Fund Facility (EFF) stalled for months.
Sources told that the Fund and officials from Ministry of Finance took a three-day break in the talks to consider the points they disagreed on.
After the break, talks on the revival $7 billion Extended Fund Facility (EFF) will restart on Monday.
Sources further claimed that officials from State Bank of Pakistan and IMF had held talks on Thursday. They discussed the points finalised in the Memorandum of Economic and Financial Policies.
The International Monetary Fund (IMF) had asked Pakistan to implement demands before reaching a staff-level agreement for the revival $7 billion Extended Fund Facility (EFF) stalled for months.
Pakistan has reportedly fulfilled all the pre-conditions of the IMF for the staff-level agreement.
‘Staff-level agreement’
Earlier in the day, Finance Minister Ishaq Dar said that the staff-level agreement with the IMF is expected within next two days.
Addressing a seminar in Islamabad, the finance minister said that the incumbent government has inherited the economic crisis and is taking steps to revive the country.
He lauded the role of the World Bank in Pakistan’s economy adding that the Asian Development Bank is key development partner of the country.
“We want to stabilize the national economy in new budget and intend to scale down challenges for general public in the next budget,” he vowed. Federal Minister promised to overcome current economic problems soon.
Monetary Policy
Earlier in the day, the State Bank of Pakistan (SBP) raised the monetary policy rate by 300 basis points to 20per cent – one of the pre-conditions of International Monetary Fund.
“This decision reflects deterioration in inflation outlook & its expectations amid recent external and fiscal adjustments. MPC believes this outlook warrants a strong policy response to anchor inflation expectations around the medium-term target of 5-7 percent,” the statement said.
“MPC noted that reduction in CAD is important but requires concerted efforts to improve the external situation. It emphasized that any significant fiscal slippage would undermine monetary policy effectiveness in the context of achieving the price stability objective,” the SBP added.
Increase in power tariff
Pakistan accepted another pre-condition of the International Monetary Fund (IMF) for the revival of $7 billion Extended Fund Facility (EFF) as the government agreed to increase electricity rates for consumers of K-Electric (KE) and agricultural community.
According to documents, the implementation of uniform tariff will increase electricity rates by an average of Rs3.21 per unit.
The residential consumers using over 100 will be charged Rs1.49 per unit and those consuming 700 units will pay Rs3.21 per unit. Meanwhile, the power tariff for temporary residential customers and industrialists will be increased by Rs4.45 per unit.
The government also decided to increase electricity rates by Rs1.55 for consumers on a quarterly basis. It has also been decided to increase the quarterly rate of customers from July 2022 to September 2022.
The federal government raised the power tariff for agricultural consumers and withdrew the subsidy under the Kissan package to meet International Monetary Fund (IMF) terms.
The subsidy given to agricultural consumers of Rs 3.60 per unit under the Kissan Package has been withdrawn. Agricultural consumers now have to pay Rs 16.60 per unit for power tariffs.
