After the new government of Prime Minister Shehbaz Sharif has taken office, ousting the Imran Khan regime through a no-confidence motion, it is now gearing up to re-initiate talks with the International Monetary Fund (IMF) and World Bank (WB) through a high-powered economic team, aiming to restart the IMF programme.
The IMF had recently suspended its programme amid the political turmoil in Pakistan, stating that it would re-initiate talks with the new government that would take charge of the country.
Its decision came when then Prime Minister Imran Khan was faced with a major challenge when opposition parties joined together and tabled a no-confidence motion, which later led to his ouster and brought in Shahbaz Sharif as his successor. As per details, the Pakistan government is sending a high-powered delegation to Washington to participate in the upcoming annual spring meeting of the Breton Wood Institution, such as the IMF and the WB.
It is expected to meet with the IMF team on the sidelines in a bid of fresh contacts and open up table talks for revival of the IMF programme. It is pertinent to mention that Pakistan is far off the target as per the IMF programme in terms of widening current account deficit and budget deficit for the current fiscal year. "The Ministry of Finance would have a technical meeting with the IMF on coming Friday, but there is no scheduled virtual meeting for review talks at this point in time," said a government official with knowledge about the Pakistani delegation's visit to Washington.
The Pakistani delegation is expected to be led by Miftah Ismail, the probable PM's Advisor on Finance. "The delegation was scheduled to participate in the upcoming annual spring meeting of BWIs this week. The official delegation will consist of the Finance Secretary, the State Bank of Pakistan Governor and Additional Secretary, External Finance," said Ismail.
"Discussions with the IMF are never halted. There was an interregnum because there was no Finance Minister.We have been sharing date with the IMF. Now with the spring meeting next week, our discussions have become more regular and focused on completing the 7th review," Finance Secretary Hamid Yaqoob said. Experts believe that revival of the IMF programme and successfully passing through the 7th review will be very difficult for Pakistan as the massing deficits of current account and budget will not allow Islamabad to see through the review.
"The government decision to keep petroleum prices unchanged also sent out wrong signals to the IMF. Without changing the approach and doing away with the relief mechanism, the revival of IMF programme will remain impossible," senior economist Mehtab Haider said. "POL (Petrol, Oil and Lubricants) prices should be adjusted upward in a staggered or gradual manner. A comprehensive approach needs to be adopted whereby the unjustified subsidies for big industrialists such as for fertiliser, sugar and other sectors to the tune of Rs 1,000 billion per annum should be abolished and diverted towards financing targeted fuel subsidies," another renowned economist Yousuf Nazar said.
Pakistan's crippled economy remains as one of the most difficult challenges for the newly-elected government of PM Shehbaz Sharif and IMF programme compliance will require difficult decisions of inflation increase, something that the current government, which is in power for a short period of time, does not want to do.