ISLAMABAD – The International Monetary Fund (IMF) has indicated Pakistan to adopt “decisive policies” if it were to acquire a bailout – implying that the fund remained inflexible in its conditions to impose new taxes and increase tariffs – making it a prerequisite for the bailout package.
Yesterday, Prime Minister (PM) Imran Khan held an important meeting with IMF Managing Director Christine Lagarde in Dubai on the sidelines of the World Government Summit.
“I had a good and constructive meeting with Prime Minister Khan, during which we discussed recent economic developments and prospects for Pakistan in the context of ongoing discussions toward an IMF-supported program,” Lagarde said in a statement on Sunday.
“Decisive policies and a strong package of economic reforms would enable Pakistan to restore the resilience of its economy and lay the foundations for stronger and more inclusive growth,” she went on to say.
According to sources of finance ministry, the IMF has asked Pakistan to take effective measures – pertaining to insufficient tax revenue, higher lending or interest rates by banks and slow-going economic reforms – before taking a financial package.
Meanwhile, PM Imran Khan has pledged to carry out deep structural reforms of the state s economy to overcome the balance-of-payment crisis, after the IMF offered to avert it.
Besides, the IMF has also urged the Pakistani government to limit subsidies, and suggested an increase in the prices of electricity and gas.
IMF has asked Pakistan to take concrete steps for reducing the losses in the energy sector and speed up economic reforms.
On Sunday, both sides agreed to work together on policy priorities and reforms aimed at reducing imbalances and laying the foundations of a job creating growth path in Pakistan, according to a statement by Pakistan’s finance ministry.
In this regard, talks are expected to continue for finalizing an agreement, the statement said.
The IMF has not been satisfied with the previous increase in electricity and gas prices, and is seeking further upward adjustments in tariffs.
There was a convergence of views on structural reforms in a meeting with Managing Director Christine Lagarde in Dubai on Feb. 10, Khan said in a twitter post.
Pakistan is currently negotiating its 13th IMF bailout since the late 1980s.