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IMF bailout plan is unrelated to elections, an official claims
IMF bailout plan is unrelated to elections, an official claims
ISLAMABAD: According to The News, the International Monetary Fund (IMF) made it clear on Thursday that the ninth tranche of the Extended Fund Facility (EFF) arrangement between the lender and Pakistan was unrelated to elections.
- An official claims that the IMF sets overall general government targets.
- There is financial room to allocate spending or generate more funds for constitutional activities within this.
- The Finance Ministry has informed ECP that separate province elections would require funding from the government.
Esther Perez Ruiz, the IMF’s Resident Chief in Pakistan, said, “decisions regarding the constitutionality, viability, and timing of the provincial and general elections rest solely with Pakistani institutions.”
The representative claimed that the international lender sets overall general government targets.
To ensure that constitutional activities can take place as necessary, there is financial room to allocate or reprioritize spending or raise extra funds within these.
Financial Crisis Hinders Government Pakistan’s Ability to Hold Separate Provincial Assembly Elections
The Finance Ministry informed the Election Commission of Pakistan (ECP) that the nation was experiencing a severe economic crisis and that the government lacked the resources to hold two provincial assembly elections separately within 90 days, as required by the Supreme Court when it made its statement.
International lender
The Punjab polls were postponed earlier this week by the ECP, who said that the finance secretary had cited a lack of cash and the prevailing financial crisis as justifications.
Pakistan is the only nation in South Asia without a bailout from an international lender.
This week, Sri Lanka secured financing, while Bangladesh is moving on with the implementation of IMF-mandated reforms.
To resume a $6.5 billion IMF loan package, Pakistan has implemented severe conditions like raising taxes and energy costs and allowing its currency to depreciate.
The money will provide some solace to a country still suffering from a dollar shortage that has increased the risk of the economy contracting before this year’s elections.
The government’s latest announcement of a petrol assistance plan did not sit well with the international lender either.
Hence making it more challenging for the nation to obtain the staff-level agreement.
Musadik Malik, the state minister for petroleum, revealed earlier this week that the federal government had subsidized gasoline up to Rs. 100 for motorcyclists and owners of automobiles up to 800cc to reduce the impact of high gasoline costs on the inflation-hit populace.
According to the minister, a complete approach would make subsidized gasoline available to motorcyclists and owners of cars with engines up to 800cc.
The IMF, however, has stated that the Pakistani government should have consulted it before implementing its low-income groups’ gasoline subsidy.
Information On The Scheme’s Operation
According to Esther Perez, the government’s idea is to boost fuel costs for more affluent drivers to pay for a subsidy for those with lower incomes.
She told the journal that the IMF’s resident representative for Pakistan should have been discussed with the lender.
According to Perez, the fund staff seeks further information on the scheme’s operation, cost, targeting, safeguards against fraud and abuse, and mitigating measures. They will carefully address these aspects with the authorities.
Notwithstanding IMF worries, the government is “still” working on pricing the “Petrol Relief Package.”
- The ministry has six weeks to create an aid package.
- The minister of petroleum claims it is not a subsidy. It is a system of pricing.
- The IMF hasn’t expressed any concerns,
KARACHI: According to Minister of State for Petroleum Musadik Malik, the federal government is developing a fuel pricing plan to aid the poor.
However, some economists worry that this plan may obstruct a critical International Monetary Fund (IMF) payment necessary to avert an economic collapse.
The government’s intentions for fuel prices were revealed by Prime Minister Shehbaz Sharif last week.
Malik told Reuters that his ministry had been given six weeks to draft the relief plan, which calls for raising fuel prices for wealthy consumers and using the extra revenue to lower costs for the poor, who were particularly hard-hit by February’s inflation, which was at its highest level in fifty years.
That is not an aid program. It is a system of pricing. That is a scheme to help the underprivileged, added Malik.
Elimination Of Subsidies
According to a ministry spokesman, the price differential between the rich and the poor will be Rs100 (or around 30 US cents) per liter.
Pakistan is pleading with the IMF to release a $1.1 billion tranche from a $6.5 billion bailout agreed upon in 2019 since it barely has enough foreign reserves to pay around four weeks’ worth of essential imports.
The devaluation of the rupee and the elimination of subsidies. And an increase in energy costs is just one of the fiscal measures the administration has put in place as prerequisites for the deal.
The finance minister said this month was “extremely close.”
This Thursday, a local IMF representative, Esther Perez Ruiz, said the government had yet to consult the fund about the fuel pricing plan.
She said the fund would request further information from the government regarding the proposal, including how it will be implemented and what safeguards will be put in place to prevent abuse.
The scheme is not a grant.
When asked about the IMF’s worries, Malik said the program was not a subsidy. He stated we hadn’t heard any concerns from the IMF.
It is the same as what we did in the gas sector, and the IMF approved of that, he continued.
The government introduced various natural gas rates earlier this year based on the quantity of fuel used.
According to economists, the plan might scuttle Pakistan’s recent gains in negotiations with the IMF.
According to the former deputy governor of the central bank Murtaza Syed, the staff-level agreement may delay because it appears to discuss with the IMF.
Low-Income People With Gasoline Subsidies
What is the government’s strategy for the gasoline subsidy?
Musadik Malik, the minister of state for petroleum, announced this while speaking to reporters in Lahore.
Malik says, “Prime Minister Shehbaz Sharif has ordered to provide low-income people with gasoline subsidies up to Rs100 per liter.” A 50 rupee per liter subsidy previously establish.
According to the minister, a complete approach would make subsidized gasoline available to motorcyclists and owners of cars with engines up to 800cc.
Malik adds that owners of automobiles with engines larger than 800 ccs would charge the total amount.
He adds that the government would lower the price of gasoline for the underprivileged and that the plan to offer discounts on fuel would implement within six weeks.
The cost of gasoline will increase for owners of large automobiles. The petrol price will differ by Rs. 100 between the rich and the poor.
In a population of 220 million, there are 210 million poor individuals. We support the struggling Pakistan.
According to him, the decision about the gas tariff became effective on January 1. We have different taxes for the wealthy and the poor.
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