WASHINGTON: The International Monetary Fund (IMF) and Pakistan moved closer to the revival of their loan package on Saturday as Islamabad has taken several steps to reduce its expenditure, increase energy prices and improve tax collection, as demanded by the IMF.

The moves bring Pakistan closer to meeting an IMF demand that the country achieve a primary budget surplus of 153 billion rupees — 0.2 per cent of the national output for the new financial year — to revive the bailout package.

After the last round of talks, IMF Resident Repres­entative in Islamabad Esther Perez Ruiz said, “Discussions between the IMF staff and the authorities on policies to strengthen macroeconomic stability in the coming year continue, and important progress has been made over the FY23 budget”.

Since then, Pakistan has taken other key steps to IMF demands.

But Michael Kugelman, a scholar of South Asian affairs at the Wilson Centre, Washington, thinks that the Fund wants more.

“My sense is that the IMF wants to get a better sense of Islamabad’s commitment to meeting IMF criteria before agreeing to release more funds,” he said.

He said the new government started off “slowly and indecisively,” refusing to remove the energy subsidy that the IMF wanted gone and this proved costly in the previous round of talks.

“To its credit, the (Shehbaz) Sharif government is now doing all the right things, through the release of its austerity budget and other revenue-generating moves. So, the IMF funds should start coming in,” he added.

The Bloomberg financial wire also agrees with this assessment, saying that “Pakistan is probably closer to an IMF loan”.

Published in Dawn, July 10th, 2022

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