ISLAMABAD: The government expects to reach a staff-level agreement with the International Monetary Fund (IMF) next month, Finance Minister Miftah Ismail said on Saturday, a day after the government ended a months-old freeze on fuel prices, reviving hopes that the country can unlock funding.

“We are expecting a staff-level agreement with the IMF in June. What matters is the agreement, after which money can be deposited any time,” he told reporters at a press conference alongside Minister of State for Finance Aisha Ghaus Pasha.

“IMF will give $3bn. We have requested them to extend the programme by a year and expand it by $2bn. I expect that they will agree,” he said.

Once the agreement with the IMF was finalised, it would pave the way for receiving loans from other multilateral organisations (such as the World Bank and the Asian Development Bank), he said. Even China had linked any loan with the revival of the IMF programme, he said.

Minister says staff-level accord will lead to release of $3bn, seeks additional $2bn funding from the lender

Late on Thursday, the government announced it would hike fuel prices after an agreement with the IMF that included an end to fuel subsidies, allowing the resumption of aid from a $6bn package signed with the Fund in 2019.

Mr Ismail said his government took tough decisions to reverse the previous government’s subsidy programme.

The country would have defaulted because of fuel subsidies announced by the previous government, he said, explaining that the subsidies were costing thrice the amount needed to run the entire civil government.

He said that according to the PTI government’s deal with the IMF, all subsidies were to be removed, tax levy be increased to Rs30 and a sales tax be imposed — which could raise the per-litre price of diesel to Rs300 and petrol to Rs276. “We are not going by this formula,” he insisted.

In response to a question, Mr Ismail said he did not know whether fuel prices would be increased again starting June 1. “I don’t think it will be appropriate to raise the prices again in a few days since we have already increased them from May 26, but I am not sure.” He also said he had not received a summary to increase the power tariff.

Responding to a question, the minister said there had been no discussion on privatisation in recent talks with the IMF, adding that Saudi Arabia was “willing to help us more”, but he would share the details in July.

Shaukat Tarin, who was the finance minister under the PTI government ousted last month, told Dawn his government set aside Rs466bn for these subsidies until the end of June. Of these, Rs100bn was funded from the Public Sector Development Programme, Rs140bn from Punjab and Khyber Pakhtunkhwa, Rs120bn from dividends, and Rs106bn from grants and Federal Board of Revenue’s additional enforcements.

“We have already discussed this with the IMF,” he said, adding that the lender wanted confirmation from provinces and gas companies. Mr Tarin said these details existed on the finance ministry’s records and with officials concerned.

Relief package

Finance Minister Ismail has said the government’s relief package, announced by Prime Minister Shehbaz Sharif a day earlier, would help protect the poor people from the “storm of inflation” left by the previous PTI government and the recent hike in fuel prices.

Shared the criteria for availing the ‘Sasta Petrol, Sasta Diesel’ relief package, the minister said women whose household income was below Rs40,000 per month could text their computerised national identity card (CNIC) numbers on 786 or call that number to receive Rs2,000 per month.

He said the relief amount would also be incorporated in the upcoming budget, to be presented in the National Assembly next month.

The minister said the government would also augment the Benazir Income Support Programme (BISP).

He clarified that the relief package was not limited to motorcycle owners but included anyone whose monthly household income was below Rs40,000. People who were already BISP beneficiaries did not need to send their details on 786 since they would automatically receive the amount, he added.

Under the relief package, 14 million households would receive the amount. “Rs2,000 will be given in June and it will cost the government Rs28 billion. Besides 3.3m BISP beneficiaries, [the package] covers 6.7m households with poverty scores below 37,” he said.

“This money will be given to the poorest families,” he said. “We have the data and phone numbers of BISP recipients, we will start giving them the money from June 1.”

However, the money would only be given to the women of the household, he said.

He said another programme was also being launched under which flour and sugar would be provided at Rs40 and Rs70 per kilogram, respectively.

Published in Dawn, May 29th, 2022

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