Even after realizing much toughest conditions from the government, the International Monetary Fund is not satisfied and is asking Pakistan to “do more”for bailout package of 1.2 billion dollars tranche , which is the part and parcel of the 6.00 billion total loan.
Now the IMF has put a new condition by seeking guarantee for external financing, which means that those countries and international donors that made pledges to give Pakistan for either debts or aid should fulfil their promises.
The IMF Director Communications Julie Kozack told the media at Washington DC that the staff level agreement would be signed after Pakistan would assure IMF that external financing from friendly countries has been confirmed.
She said that though Pakistan has started taking measures to strengthen its economy , there is still a lot of room for improvement. Besides IMF , Pakistan is getting aid from many friendly countries like China, Saudi Arabia and United Arab Emirates and international donors agencies including World Bank, Asian Development Bank and Asian Infrastructure Investment Bank.
“IMF will ask Pakistan about the details of subsidy on petroleum products ,ways to implement it and strategy to prevent its misuse”, the IMF official added.
Earlier the fund had asked to settle the issue of subsidy on the energy sector, due to which the government had to withdraw its orders to provide petrol at reduced rates to motorcyclists and cars up to 800 CC.
The IMF officials said that Pakistan’s economy is facing the problems due to slow rate of growth , devastating floods and high rate of inflation. It also said that at present ample amounts of funds are available in the national exchequer to meet the expenditure of extremely important nature.
The official sources also confirmed that the factors involving the delay in signing the staff level agreement included trust deficit, lack of capacity for implementation of social development programmes and shelving tactics by the International Monetary Fund . Due to this deferral the inking of Memorandum of Economic and Financial Policies (MEFP), which is considered to be the most crucial document, which is to be signed with the IMF is also postponed.
This delay is a big setback for Pakistan as the ninth review of the economy by the IMF was to be completed by 10th April this year, but now it looks like that this would not be carried out in time.
The both sides would move forward after the guarantees sought by the IMF regarding external financing from the government and if Pakistan would fail to fulfil the demands of the fund then the matter would be lingering on and the possibility of moving towards default would be enhanced for Pakistan.
The economic situation of the country is not favorable at the moment as the current wave of price hike snatched purchasing power from the common man, foreign investment has stopped and industries are going swiftly towards closure. Government does not have enough money to clear the circular debt of the energy sector.
In these circumstances the bailout package from IMF is the ray of hope for Pakistan and the government would not lose the chance to satisfy the IMF.