Pakistan to Initiate IMF Loan Negotiations Post Parliamentary Approval
Negotiations for a new loan program with the International Monetary Fund (IMF) will commence once parliamentary approval for the loan targets is secured, according to sources. Recent discussions with the IMF delegation. Which concluded yesterday focused on something other than a new loan program but on economic data and preliminary budgetary outlines.
Sources indicate that the IMF has collected comprehensive economic data from Pakistan. After evaluating this data, the IMF has provided Pakistani officials with budgetary guidelines. These guidelines include targets for privatization, energy sector reforms, tax collection goals for the upcoming fiscal year. An action plan for Federal Board of Revenue (FBR) reforms. The IMF has recommended increases in electricity and gas tariffs and suggested an 18% GST on petroleum products.
Government Considers Carbon Levy on Petroleum Products for Fiscal Year Ahead
The government, in response, is taking into consideration a carbon levy on petroleum merchandise instead of the proposed GST for the subsequent monetary year. Currently, the government is accumulating a petroleum levy of Rs 60 in keeping with the liter. It is expected to generate Rs 1080 billion in the imminent economic 12 months. Revenue from the petroleum levy is projected to collect Rs 2295 billion over the subsequent years. With Rs 1215 billion predicted from petroleum levies in the following year.
It is crucial to note that budget targets and outlines will need parliamentary approval before formal negotiations with the IMF can begin. This approach marks the first instance where Pakistan will either implement all IMF demands or establish implementation timelines for these targets before initiating negotiations. This procedural change aims to ensure a smoother negotiation process and greater compliance with IMF requirements.
Negotiations for the new loan program are anticipated to start in June. Both IMF and Pakistani officials are working towards finalizing a settlement before the financial year begins on July 1. The US intends to align its strategic timing with Pakistan’s economic planning to ensure that it meets its monetary targets efficiently.
