What's new

IMF sets tough terms for bailout revival

Jul 31, 2015
1,173
6
2,338
Country
Pakistan
Location
Pakistan
ISLAMABAD:
The International Monetary Fund (IMF) has set out five major conditions for the revival of $6 billion bailout package, including reversal of fuel subsidies and withdrawal of the tax amnesty scheme, the new finance minister, Miftah Ismail, said on Wednesday.

The other conditions are increase in electricity tariffs, imposition of new taxes and ensuring fiscal savings aimed at bringing down the projected primary budget deficit of Rs1.3 trillion to the earlier agreed limit of Rs25 billion surplus, he said while speaking to journalists.

The government has a plan to get financial assistance from China and secure liquefied natural gas (LNG) on deferred payments from Qatar aimed at taking off pressure from the external sector.

The minister had his first formal interaction with the media hours before departure to Washington where he planned to meet with the IMF management for the revival of the stalled programme. But before flying to Washington Ismail had to approach a court to get his name struck off the no-fly list.

Miftah Ismail has requested a face-to-face meeting with IMF Managing Director Christalina Georgieva. He would also meet with the deputy managing director and staff of the IMF to seek maximum possible concessions against the commitments given by the previous Pakistan Tehreek-e-Insaf (PTI) government.

The IMF programme remains stalled due to the previous government’s back-pedalling on implementation of the condition it had agreed with the Fund in addition to fixing the fuel prices at their March 1st level.

“Pakistan is going to the IMF programme and Prime Minister Shehbaz Sharif has instructed me to make sure that there is least burden on the people in return for revival of the programme,” Ismail told the journalists.

“I have interacted with the IMF staff and it [IMF] has put forth five major conditions related to reversal of fuel subsidies, withdrawing tax amnesty scheme, increasing the electricity prices, imposing more taxes and ensuring fiscal savings,” he continued.

However, the finance minister maintained that Pakistan had not yet accepted these conditions and a decision would be made after holding talks with the Fund.

The conditions have been set out for the next loan tranche of around $960 million under the 7th review of the programme. The finance minister clarified that at this stage, he was not interested in the two programme reviews.

Read Miftah eyes revival of IMF programme

At the moment three programme reviews are pending and their completion will pave the way for the release of a total $3 billion remaining three tranches before the programme is completed in September.

“Former prime minister’s irresponsible action to give fuel subsidies without seeking input from the Ministry of Finance has turned things very sensitive,” Ismail said. “The decision to give the fuel subsidies has put Pakistan’s economic future at stake.

The finance minister added that the revised estimates suggested that the country would need to pay Rs192 billion more in fuel subsidies for the May-June period, bringing the total subsidies to Rs293 billion since March 1st.

According to the minister, the IMF wanted that not only the subsidies be withdrawn but the government should also restore petroleum levy and sales tax on the sales of the petroleum products. “An owner of a Land-Cruiser is availing Rs1,680 subsidy on every fuel tank, he added, endorsing the IMF’s view on withdrawing these subsidies.

The minister did not see any problems in withdrawing the tax amnesty scheme that the previous Imran Khan government had announced. He said that the government was ready to reduce the Public Sector Development Programme (PSDP) to Rs600 billion.

Responding to a question, whether the government would impose inheritance tax as an alternative to taxing the salaried individuals, the minister said that it was not necessary that the son of a rich person should also be rich.

Ismail vowed that the government would not endorse those conditions that could disrupt economic activities. He hoped that the IMF would not push hard to immediately increase the electricity prices and an effort would be made to delay this action too.

About seeking financial help from China, the minister said that Chinese leadership had high regards for the Sharif brothers – Prime Minister Shehbaz Sharif and former prime minister Nawaz Sharif. He hoped that the country would get $4.3 billion breathing space from China in the shape of earlier disbursement of $2.3 billion commercial loan and rollover of $2 billion SAFE deposits.

The finance minister said that his immediate challenge was to sustain the foreign exchange reserves at the current levels and also arrange $4 billion more to pay for the current account deficit.

When asked about the downward slide of the rupee value against the dollar that closed at Rs185.92 on Wednesday, Ismail said that the exchange market was very thin and there was a need for remaining vigilant about any attempts to manipulate the rupee value.
 

Crimson Blue

FULL MEMBER
Nov 7, 2019
978
0
1,492
Country
Pakistan
Location
United States
Didn't PML(N) use to criticize the IMF program accepted by previous government. I thought they were going to unshackle the Pakistan from the clutches of IMF.
 

ziaulislam

ELITE MEMBER
Apr 22, 2010
19,091
11
20,068
Country
Pakistan
Location
United States
ISLAMABAD:
The International Monetary Fund (IMF) has set out five major conditions for the revival of $6 billion bailout package, including reversal of fuel subsidies and withdrawal of the tax amnesty scheme, the new finance minister, Miftah Ismail, said on Wednesday.

The other conditions are increase in electricity tariffs, imposition of new taxes and ensuring fiscal savings aimed at bringing down the projected primary budget deficit of Rs1.3 trillion to the earlier agreed limit of Rs25 billion surplus, he said while speaking to journalists.

The government has a plan to get financial assistance from China and secure liquefied natural gas (LNG) on deferred payments from Qatar aimed at taking off pressure from the external sector.

The minister had his first formal interaction with the media hours before departure to Washington where he planned to meet with the IMF management for the revival of the stalled programme. But before flying to Washington Ismail had to approach a court to get his name struck off the no-fly list.

Miftah Ismail has requested a face-to-face meeting with IMF Managing Director Christalina Georgieva. He would also meet with the deputy managing director and staff of the IMF to seek maximum possible concessions against the commitments given by the previous Pakistan Tehreek-e-Insaf (PTI) government.

The IMF programme remains stalled due to the previous government’s back-pedalling on implementation of the condition it had agreed with the Fund in addition to fixing the fuel prices at their March 1st level.

“Pakistan is going to the IMF programme and Prime Minister Shehbaz Sharif has instructed me to make sure that there is least burden on the people in return for revival of the programme,” Ismail told the journalists.

“I have interacted with the IMF staff and it [IMF] has put forth five major conditions related to reversal of fuel subsidies, withdrawing tax amnesty scheme, increasing the electricity prices, imposing more taxes and ensuring fiscal savings,” he continued.

However, the finance minister maintained that Pakistan had not yet accepted these conditions and a decision would be made after holding talks with the Fund.

The conditions have been set out for the next loan tranche of around $960 million under the 7th review of the programme. The finance minister clarified that at this stage, he was not interested in the two programme reviews.

Read Miftah eyes revival of IMF programme

At the moment three programme reviews are pending and their completion will pave the way for the release of a total $3 billion remaining three tranches before the programme is completed in September.

“Former prime minister’s irresponsible action to give fuel subsidies without seeking input from the Ministry of Finance has turned things very sensitive,” Ismail said. “The decision to give the fuel subsidies has put Pakistan’s economic future at stake.

The finance minister added that the revised estimates suggested that the country would need to pay Rs192 billion more in fuel subsidies for the May-June period, bringing the total subsidies to Rs293 billion since March 1st.

According to the minister, the IMF wanted that not only the subsidies be withdrawn but the government should also restore petroleum levy and sales tax on the sales of the petroleum products. “An owner of a Land-Cruiser is availing Rs1,680 subsidy on every fuel tank, he added, endorsing the IMF’s view on withdrawing these subsidies.

The minister did not see any problems in withdrawing the tax amnesty scheme that the previous Imran Khan government had announced. He said that the government was ready to reduce the Public Sector Development Programme (PSDP) to Rs600 billion.

Responding to a question, whether the government would impose inheritance tax as an alternative to taxing the salaried individuals, the minister said that it was not necessary that the son of a rich person should also be rich.

Ismail vowed that the government would not endorse those conditions that could disrupt economic activities. He hoped that the IMF would not push hard to immediately increase the electricity prices and an effort would be made to delay this action too.

About seeking financial help from China, the minister said that Chinese leadership had high regards for the Sharif brothers – Prime Minister Shehbaz Sharif and former prime minister Nawaz Sharif. He hoped that the country would get $4.3 billion breathing space from China in the shape of earlier disbursement of $2.3 billion commercial loan and rollover of $2 billion SAFE deposits.

The finance minister said that his immediate challenge was to sustain the foreign exchange reserves at the current levels and also arrange $4 billion more to pay for the current account deficit.

When asked about the downward slide of the rupee value against the dollar that closed at Rs185.92 on Wednesday, Ismail said that the exchange market was very thin and there was a need for remaining vigilant about any attempts to manipulate the rupee value.
IK going path of PMLN by subsidizing fuel
It should have kept sales tax + fuel price

To bring prices down what it needs is to build local fuel processing capabilities
Give a zero tax regime for new generation refineires

Sad but only bureaucracy perks and luxuries is to be blamed.
Why?
Khata hey tu lagata hey is pakistani mantra and as expected IK buckled to pressure of "inflation" thr only reason why his govt was unpopular
Nobody bought"global inflation" mantra
 

JackTheRipper

BANNED
Oct 17, 2019
1,018
-10
1,206
Country
Pakistan
Location
Pakistan
IK going path of PMLN by subsidizing fuel
It should have kept sales tax + fuel price

To bring prices down what it needs is to build local fuel processing capabilities
Give a zero tax regime for new generation refineires


Why?
Khata hey tu lagata hey is pakistani mantra and as expected IK buckled to pressure of "inflation" thr only reason why his govt was unpopular
Nobody bought"global inflation" mantra

Donkey ne kon sa teer mar liya tha?

Kabhi india k rates check kiye hain wheat flour, cooking oil and others, only petrol prices are up, compare with Pakistan, after currency conversion, still too much inflation in Pakistan than others, mr. youthiye
 

RoadRunner401

SENIOR MEMBER
May 28, 2015
3,440
0
3,534
Country
Pakistan
Location
Canada
IK going path of PMLN by subsidizing fuel
It should have kept sales tax + fuel price

Why? IK was making all the hard decisions and getting blamed for it by then opposition (poor (ghareeb) was being killed) and they only were in politics to help the ghareeb (poor) they created. What's stopping the "Imported Government" from Making those decisions PMIK is No longer in charge, why is Miftah going to IMF they had the formula to fix it without going to the IMF...


Expensive electricity contracts PML_N signed are now actually PML_N problem and will expose them because they can't hide it. Borrowed heavily to subsidize imports and keep the dollar artificially low, guess what that's not going to happen anymore. I am actually enjoying this all those Tricks PML_N was doing and making it look like an economic miracle they were pulling out of thin air are now falling back in its basket except this time They are on the receiving end and no hiding from it.
 

ziaulislam

ELITE MEMBER
Apr 22, 2010
19,091
11
20,068
Country
Pakistan
Location
United States
PTI planted landmines by providing fuel subsidy.
Not really. PMLN can anytime stop it..it isnt something that was unbudgeted

Sure a political land mine but wasnt that the census among opposition to work against mehnagi?

Seconsly the fuel subsidiy barely lasted for a month!

So the US will not finance its newly reacquired colony??
Nope why would it??
Usa did a regime change in iran for 30m$ when it imposed the shah..the budget was well above 100m

I think here it didnt spend a penny..just gave a few warnings and viola
 

Waterboy

FULL MEMBER
Dec 19, 2014
566
-2
1,173
Country
Pakistan
Location
Pakistan
Not really. PMLN can anytime stop it..it isnt something that was unbudgeted

Sure a political land mine but wasnt that the census among opposition to work against mehnagi?

Seconsly the fuel subsidiy barely lasted for a month!


Nope why would it??
Usa did a regime change in iran for 30m$ when it imposed the shah..the budget was well above 100m

I think here it didnt spend a penny..just gave a few warnings and viola
Oh please. PTI projected it self as the holier party trying to benefit pakistan as a whole. Petrol subsidy was a politcal move not the one in country's favour.

Whatever IK did will cost us dearly.
 

عقاب

FULL MEMBER
Sep 21, 2020
143
0
144
Country
United States
Location
United States
Didn't PML(N) use to criticize the IMF program accepted by previous government. I thought they were going to unshackle the Pakistan from the clutches of IMF.
Did’nt the previous govt said that “ moat qabool kr lon ga lekin qarza ni lon ga tmhari trh” ?
they are the same club my friend
 

Dalit

BANNED
Mar 16, 2012
17,058
-19
32,272
Country
Pakistan
Location
Netherlands
LOL Welcome to old Pakistan. The PDM beggars are back to being beggars. Is this what these Noonies had in mind? Is this the magic formula that was supposed to lift the Pakistani economy? Not even daddy America is coming to the rescue as predicted. Embrace yourselves folks. We are back to square one. Huge piles of debt are on their way. Pakistani generations are already dealing with massive loans that have to be repaid. PML-N is renowned for taking record loans.
 
Last edited:

Users Who Are Viewing This Thread (Total: 1, Members: 0, Guests: 1)


Top Bottom