Fund presses on ‘urgency’ of removing fuel, energy subsidies
The International Monetary Fund (IMF) on Wednesday emphasised upon Pakistan the urgency of “removing fuel and energy subsidies” to achieve programme objectives.
Finance Minister Miftah Ismail had earlier this week said he would convey to the IMF that fuel and energy subsidies — which were introduced by the previous PTI government — could not be reversed as the “nation cannot endure it”.
But in a statement issued earlier Wednesday, the IMF said it had “emphasised the urgency of concrete policy actions, including in the context of removing fuel and energy subsidies and the FY2023 budget, to achieve program objectives”.
According to the IMF, the mission held “highly constructive discussions” with the Pakistani authorities aimed at reaching an agreement on policies and reforms that would lead to the conclusion of the pending seventh review of the authorities’ reform programme.
It said the considerable progress was made during the mission, including on the need to continue to address high inflation and the elevated fiscal and current account deficits, while ensuring adequate protection for the most vulnerable.
“In this regard, the further increase in policy rates implemented on May 23 was a welcome step. On the fiscal side, there have been deviations from the policies agreed upon in the last review, partly reflecting the fuel and power subsidies announced by the authorities in February.” Meanwhile, Foreign Minister Bilawal Bhutto-Zardari said the ongoing bailout deal between Pakistan and the IMF was “outdated” given a number of global crises. “This IMF deal is not based on ground realities, and the context has absolutely changed from the time that this deal was negotiated,”
