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  18 May 2022, 10:05

Pakistan and IMF to meet over release of funds as economy falters

ISLAMABAD, May 18, 2022 (BSS/AFP) - The International Monetary Fund will
begin talks with Pakistani officials on Wednesday over the release of crucial
funds, a process slowed by concerns about the pace of economic reforms in the
South Asian country.

Pakistan has repeatedly sought international support for its economy, which
has been hit by crippling national debt, galloping inflation and a plummeting
rupee.

The talks will be held in the Qatari capital Doha, Pakistan's finance
ministry said, and are expected to continue into next week.

A major sticking point is likely to be over costly subsidies -- notably for
fuel and electricity -- and Finance Minister Miftah Ismail said he wants the
two sides to "find a middle ground".

"The government will try to convince the IMF that for political stability
purposes it is important to keep at least some of the subsidies," said
economist Shahrukh Wani.

"The IMF will possibly, rightly, say that these are unsustainable and they
should be rolled back to make the trade and budget deficit manageable," he
added.

A six billion dollar IMF bailout package signed by former prime minister
Imran Khan in 2019 has never been fully implemented because his government
reneged on agreements to cut or end some subsidies and to improve revenue and
tax collection.

Islamabad has so far received $3 billion, with the programme due to end later
this year.

Officials are seeking an extension to the programme through to June 2023, as
well as the release of the next tranche of $1 billion.

Pakistani Prime Minister Shehbaz Sharif, who took power with a coalition that
removed Khan in a no-confidence vote last month, has vowed to jumpstart the
moribund economy, but analysts say his fragile government has failed to take
tough decisions.

"It's an administration that has refused to take hard political steps to
bring eventual economic relief -- but that's exactly the sacrifice it must
make by going to the IMF," said Michael Kugelman, deputy South Asia director
at the Wilson Center in Washington.

 

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