Pakistan signed a $ 6 billion loan deal with the IMF in 2019, but the country’s new finance minister said the objectives attached to the loan designed to raise taxes and curb government spending are “tough “.
Pakistan is holding talks with the International Monetary Fund (IMF) to try to ease the “harsh conditions” of a $ 6 billion loan, Finance Minister Shaukat Tarin said on Wednesday.
“The goals they have given us are difficult … We have talked to them and they are very nice,” Tarin said, referring to a loan agreed in an IMF program that Pakistan entered in 2019.
Pakistan did not want to leave the program, but had asked the IMF to give us “some space,” Tarin said at a news conference.
Tarin was appointed last month as the fourth finance minister in just two years of Prime Minister Imran Khan’s rule, a period in which the country’s economy has known.
Drawing on Pakistan’s experience with the IMF’s Wide Fund, Tarin said the Khan government was already fighting for the stabilization of the impoverished economy when the coronavirus pandemic hit the country hard.
Pakistan records a record number of deaths and COVID-19 infections, so the country will close non-essential businesses and transportation for nearly two weeks from 5 May. The goal is to contain the spread of new coronavirus infections during Eid at the Muslim -Fitr festival, when hundreds of thousands of people will offer mass prayers.
“It has difficult conditions,” Tarin said of the IMF benchmarks, which include tax collection reforms and measures to raise funds from other areas to save the budget deficit.
No immediate response was obtained from the IMF’s country office.
Since the start of the IMF program, Pakistan has raised electricity prices several times.
“We have no room to raise tariffs,” Tarin said, adding that the government would introduce more tax reforms in the next budget.
“Our people are really fed up with rising inflation,” he said.
The budget for 2021-22 is just weeks away and the IMF approved a $ 500 million disbursement in March for budget support after completing a review of the loan program that had been delayed by more than one year.
The South Asian country, made up of 220 million people, saw consumer price inflation rise to 11.1 percent in April, the highest in 11 months.
With an economy that contracted 0.4 percent last year, Pakistan has revised its growth projections to 3 percent for fiscal year 2020-21. However, the IMF says the Pakistani economy is likely to expand by just 1.5 percent, suggesting that the country will have to lower its expectations for economic growth.