Fuel subsidy plan ‘not cleared with IMF’

THE International Monetary Fund (IMF) was not consulted on the government’s recent move to announce a fuel subsidy, the lender’s key official in Islamabad has said, adding that it was seeking “greater details” on the scheme, Bloomberg reported.

The statement from Esther Perez Ruiz, the IMF’s resident representative for Pakistan, came two days after the government unveiled a Rs50 subsidy on each litre of petrol for low-income people.

A day later, the government doubled the subsidy to Rs100, which could be availed by the owners of motorbikes and cars of up to 800cc.

“Fund staff are seeking greater details on the scheme in terms of its operation, cost, targeting, protections against fraud and abuse, and offsetting measures, and will carefully discuss these elements with the authorities,” Ms Ruiz told the publication.

However, she said Pakistan has made “substantial progress” towards meeting policy commitments needed to unlock critical IMF funding, though the country has a few more tasks before it can get the loan it needs avoid a default.

Fund’s Pakistan representative says Islamabad has made ‘substantial progress’

“A staff-level agreement will follow once the few remaining points are closed,” Ms Ruiz said. “Ensuring there is sufficient financing to support the authorities in the implementation of their policy agenda is the paramount priority.”

Pakistan is now the only South Asian country that’s yet to secure a bailout from the multilateral lender as Sri Lanka clinched financing this week and Bangladesh pushes on with carrying out IMF-mandated reforms, the report said.

Over the past few months, Pakistan has taken several measures to revive a stalled $6.5 billion IMF loan programme, including raising taxes and fuel prices and shifting to a market-based exchange rate.

On Monday, Prime Minister Shehbaz Sharif announced a “petroleum relief package” for low-income people. The announcement of the relief package came days after the government increased the petrol price by Rs5, to Rs272 per litre.

Published in Dawn, March 22nd, 2023