IMF & Pakistan commence policy level talks

ISLAMABAD, May 20 (SABAH):  The International Monetary Fund (IMF) and Pakistan will start policy-level talks on Monday as the cash-starved Islamabad is looking forward to clinch another deal with the Washington-based lender while meeting all the tough conditions being attached to it.

Issues like determining the size of next IMF programme and setting the related terms and condition as well as fixing the objectives and goals for next budget would be the focus of these discussions.

At the same time, the two sides are also going to set the macroeconomic targets for the next fiscal year’s budget, as the IMF is hell-bent to impose policies including monetary tightening [higher interest rates], energy tariff hikes, market-based exchange rate and privatisation.

It is expected that the two sides will complete the talks during the current week and sign a staff-level agreement, which is subjected to final approval by the IMF Executive Board.

Many experts believe that the higher interest rates are one of the ill-advised policies suggested by the IMF, which has crippled the country’s economy and the State Bank of Pakistan must start the rate cut cycle swiftly.

They are of the opinion that the current monetary policy will lead to a crushing burden of debt and taxes hampering recovery in economic activity and investment – a development which has already been visible to everyone.

And despite the fact that an overwhelming majority in Pakistan is facing a cost of living crisis, the IMF is demanding an increase in basic electricity tariff which, it says, essential to control rising circular debt.

Meanwhile, the strict IMF conditions coupled with Pakistan’s failure to fix the energy sector as well as the nature of agreements signed with the independent power producers (IPPs), the country isn’t in a position to take advantage of the slump seen in the prices solar panels and related equipment globally.

Earlier, talks started between Pakistan and the MF on not only Extended Fund Facility (EFF) but also climate financing, as Islamabad eyeing a bigger and longer bailout package to stabilise and revive its economy.