The biggest challenge for the incumbent government is reviving the bail-out program with the International Monetary Fund (IMF). As a result, the government is grappling to fulfill IMF demands of “more revenue” by heavily taxing the public.
While the public buckles under the high inflationary pressures, there are reports that Pakistan will have to take more “prior actions” to secure two combined tranches of about $1.85 billion from the IMF by the end of July or early August.
According to reports, these prior actions would be necessary for the Fund’s executive board to approve the merger of the seventh and eighth quarterly reviews of the 39-month, $6bn loan program that originally began in July 2019.
Read more: Pakistan finally secures deal with IMF
Tough times ahead?
Prior actions include increasing electricity tariffs, the cabinet taking the decision to gradually impose Rs50 per liter petroleum levy to collect Rs855 billion, and ending the government’s role in determining the oil prices.
The additional increase will put an alarming financial burden on the public. Just recently the government had raised the prices of petrol and electricity. Earlier, the Economic Coordination Committee (ECC) approved an increase of Rs7.91 per unit in the electricity prices.
The increase in electricity prices will supposedly recover an additional Rs891 billion from consumers. Now, the IMF has set prior action of notifying over Rs3.50 per unit increase in electricity prices from July.
On the other hand, after another increase, the price of petrol will jump up from Rs233.89 to Rs237.18 per liter while the price of high-speed diesel will go up from Rs263.31 to Rs281.09 per liter.
IMF has put another condition. They want a new budget plus they want that budget to be approved by the assembly.@MiftahIsmail a million times I had said that you are a disaster for Pakistan. 10 days ago you said that in 2 days IMF money will be ready.
تُف ہے اس مذاق پر
— Mir Mohammad Alikhan (@MirMAKOfficial) June 27, 2022
Moreover, Finance Minister Miftah Ismail announced that Pakistan on Tuesday received the Memorandum of Economic and Financial Policies (MEFP) from the IMF for the seventh and eighth reviews.
Under the MEFP, prior actions include the passage of the federal budget as agreed to with the IMF and presented in the National Assembly on June 24 and present a memorandum of understanding (MoU) duly signed by the provincial governments to jointly provide about Rs750bn cash surplus to the Centre.