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Monday, February 6, 2023

In an election year, the government is hesitant to implement the ‘difficult choices’ demanded by the IMF

It would seem that the government of Pakistan is hesitant to finalize an agreement with the International Monetary Fund (IMF) that would help stabilize the country’s economy because it is afraid of losing popularity in the run-up to the elections.

According to official and diplomatic sources who spoke to Dawn on Monday, both parties were still debating the seven conditions that the International Monetary Fund (IMF) wants Pakistan to adopt before it can continue providing economic aid to the country.

As part of the requests, electric subsidies must be eliminated, pricing for gasoline must be linked to global markets, a currency must be allowed to circulate freely, and LCs must not be blocked.

According to a source, the administration is concerned that the implementation of some of these requests may lead to an increase in the price of critical goods across the board.

At this point, which is so near to the elections, it will make the administration even less popular than it currently is.

The electricity regulator in Pakistan has already given Sui Northern Gas Pipeline Ltd. (SNGPL) and Sui Southern Gas Company (SSGC) permission to increase their prices by up to 75%, but this decision still has to be approved by the cabinet.

Islamabad is now holding its breath in anticipation of the 9th review of a loan deal that was struck with the IMF by the previous administration. If the review is successful, Pakistan will be granted access to the subsequent portion of the money that has been withheld since September.

The seventh and eighth evaluations of Pakistan’s bailout program, which were agreed to in 2019, were authorized by the International Monetary Fund in August 2022, allowing for the release of more than $1.1 billion.

Officials from the International Monetary Fund (IMF) have signaled that they are eager to continue working with Pakistan; however, the nation must first satisfy several fundamental needs.

An individual who is familiar with the negotiations said that “they are asking for necessities so that they may send their delegation to Islamabad,” but the finance minister is hesitant to grant their request.

According to the person, the IMF is requesting “some action on energy pricing and the proof of Islamabad’s commitment to change,” but Finance Minister Ishaq Dar is not yielding an inch in response to these requests.

Islamabad government representatives have pleaded with Prime Minister Shehbaz Sharif to take action before it is too late. Another official said that the conclusion might have been reached on this matter four months ago.

According to the official, “I do not personally anticipate much until a caretaker arrangement takes over the facility.” When asked why the official responded with the following when confronted with the question: “Dar Saheb will not allow the exchange rate to move to market levels.”

Another official in Islamabad said that “it would be a tragedy” if Pakistan waits for the caretakers to have discussions with the IMF.

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