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Finance Minister Ishaq Dar.—File Photo
Finance Minister Ishaq Dar.—File Photo

ISLAMABAD: Pakistan and the International Monetary Fund (IMF) are reported to have reached closer to an agreement on a $5.4 billion loan package.

The country’s economic team, led by Finance Minister Ishaq Dar, held a four-hour-long meeting with the IMF delegation, led by Jeffery Frank, on Monday to sort out details of the programme.

In addition to the $5.4bn IMF package, Pakistan will also get a $5.6bn loan from the Asian Development Bank and the World Bank as well as countries like Japan, the United States and the United Kingdom. The total volume of the loan will be $11bn.

According to a source, the IMF programme will pave the way for getting the additional loan from donor banks and the three lending countries.

“We have reduced the gap between various thorny issues,” the source claimed and said further progress would be achieved in a day or two. “The talks are moving in the right and positive direction,” the source added.

The two sides had reached an understanding on reducing the fiscal deficit target, a source privy to the meeting told Dawn.

The IMF wanted the government to reduce the fiscal deficit to 4.5 per cent over three years. The target has been left for Islamabad to decide if it wants to do it through reduction in expenditures or withdrawal of subsidies and tax exemptions.

Pakistan has also agreed to restart its privatisation programme from Sept 30. A comprehensive plan for the purpose would be ready in the next few months, the source said.

Finance Minister Ishaq Dar told journalists that the talks would continue for another couple of days. “We have had positive talks today,” he said, adding that people should wait for the results. He said he would not accept any new tax condition being attached to the programme.—Mubarak Zeb Khan

DAWN_VIDEO - /1029551/DAWN-RM-1x1

Comments (9) Closed

s.s.verma Jul 02, 2013 08:16am

Is withdrawal of Subsidies not equal to Fresh Taxes? ++++++++++++++++ Scratching my head.

Kazi Jul 02, 2013 09:22am

I hope this $ 11 billion does not end up into the corrupt politicians pockets. May Allah chang Pakistan and its people for the best. Ameen

kirther Jul 02, 2013 10:32am

What will be the end result more corruption, more taxes, further victimization and exploitation of smaller provinces. Negotiating and securing loan packages is not a big deal the real test and challenge for Pakistani leadership is move towards self reliance, in order to achieve this objective Pakistan needs dedicated and honest leadership. Can Pakistan secure such a leadership as part of any loan package. Piloting Pakistan out of current crisis is beyond available lot of so called leaders, who at best can only be considered as representatives of their respective provinces. Wake-up folks and look for through breed horses to take you to the the winning post.

Sultan Fatima Jul 02, 2013 10:46am

Mr Dar has committed to IMF that electricity rates would be increased to reduce budget deficit. This is a form of indirect taxation. This is what IMF has asked Mr. Dar to do. He has already increased taxes in the new budget as per compliance of IMF. Sales tax. with holding tax and income have been increased. Mr. Dar should stop befooling the masses that Pakistan will be get loan according to its terms, or those terms which are in the interest of Pakistan masses. Jul 02, 2013 11:02am

i am readind edawn on daily basis and i want pose a queation regarding IMF.If circular dead is of RS.503 million then why govt is paying RS326.Although govt has potential to pay RS503 immediately on behalf of IMF loan of RS540 million?????

Imrankhan Jul 02, 2013 02:43pm

This was the final nail on the coffin for Pakistan. Thank you Honourable Finance Minister Sir, for bailing us out on pre-defined terms.

V. C. Bhutani Jul 02, 2013 04:30pm

Let me speak like an ordinary householder. I have to run my place within my income. If I plan new things or to buy new items, I should think where the money will come from. If I borrow, I should have the means of repaying the loan and the interest thereon. I would have to re-determine my priorities to make sure that avoidable items of expenditure are stopped. If I go on living beyond my means, the lender will come and take charge of things on whose security the loan was given. I shall be in a sorry state. The whole thing turns on priorities: only the most important and unavoidable items of expenditure shall be maintained. Other or less important items will have to be given up or reduced. If I determine my priorities properly I may have chance of keeping my head above water. V. C. Bhutani, Edinburgh, 2 Jul 2013, 1230 GMT

Manu Jul 02, 2013 08:32pm

How long will Pakistan suckle at the teats of the IMF? Debt servicing is killing Pakistan as is its inflated defence budget. It is a vicious cycle and most of the money will line political and bureaucratic pockets while buying the US with a lot of leverage

gopal Jul 03, 2013 03:15am

Funny Pakistani people always blame the west for their problems. But they live on the western charity. And then they make bombs, and more bombs, year after year,with all charity money.