Pakistan Finance Minister Miftah Ismail said on Monday that the government will not remove subsidies on power and fuel as per the commitment made by the previous government with the International Monetary Fund to secure a USD 6 billion loan for the cash-starved country.
Pakistan has faced growing economic challenges, with high inflation, sliding forex reserves, a widening current account deficit and a depreciating currency.
Ismail was talking to the media in Karachi ahead of leaving for Doha to join talks with IMF officials for the restoration of a USD 6 billion loan programme for the cash-strapped country that has been in limbo since April.
“It will not happen. I have refused. Shehbaz Sharif has refused. Nawaz Sharif has refused. I am assuring you that I will not agree to [the terms] that Shaukat Tarin agreed,” Ismail said.
The minister announced that he would convey to the IMF that fuel and energy subsidies introduced by the previous Pakistan Tehreek-e-Insaf government could not be reversed as the “nation cannot endure it”.
Ousted prime minister Imran Khan in order to win public support ahead of looming no-confidence threat had announced a four-month freeze (until June 30) on petrol and electricity prices on February 28.
The subsidy has become the main hurdle in talks with the IMF which began last week in the Qatari capital. The current government is eager to get the remaining USD 3 billion out of the USD 6 billion package.
It is also trying to convince the IMF to provide another USD 2 billion and extend the ongoing programme which is ending this year till the end of the next fiscal year.
However, the IMF is not willing to move ahead until the subsidies are taken away and the fuel and energy are revised upward as per market rates.
Ismail has said in his statements that the subsidies were untenable but the governed is unwilling to bear the political cost as it would add to the economic burden of the masses.
Meanwhile, a team comprising the State Bank of Pakistan and Federal Board of Revenue officials, as well as Minister of State for Finance and Revenue, Aisha Ghous Pasha, and the finance secretary are already in Doha to negotiate with the IMF.
The talks began on May 18 and are expected to be completed this week.
Ismail told the media that he would be joining the policy-level talks that would span two to three days.
With the rising current account deficit at USD 13.2 billion in the first nine months and pressing external loan repayment requirements, Pakistan requires financial assistance of USD 9-12 billion till June 2022 to avert further depletion of foreign currency reserves.
Saudi Arabia has agreed to provide Pakistan with a “sizeable package” of around USD 8 billion to help the cash-starved country bolster dwindling forex reserves and revive its ailing economy.
Pakistan secured the deal during the visit of Prime Minister Shehbaz Sharif to Saudi Arabia. The financial package includes doubling of the oil financing facility, additional money either through deposits or Sukuks and rolling over of the existing USD 4.2 billion facilities.