Pakistan is currently focusing on addressing concerns raised by the International Monetary Fund (IMF) related to its proposed fuel subsidy plan, as the country seeks to revive a delayed $6.5 billion bailout program, Bloomberg reported.
The bailout package is crucial to avoiding default, and the government has been taking measures such as raising taxes, increasing energy prices, and allowing currency depreciation to meet the conditions set by the IMF.
Dr. Musadik Malik, Minister of State for Petroleum, acknowledged the IMF’s reservations about the government’s plan, which involves raising fuel prices for wealthier citizens to finance subsidies for lower-income individuals.
This plan is designed to protect the poor and vulnerable segments of society. Malik stated that as they move forward, they aim to address the concerns of the IMF and ensure that the lender fully understands the government’s intentions and motivations behind the proposed plan.
Fuel price subsidies have previously been a contentious issue for the IMF. In fact, similar measures introduced by the former Imran Khan-led government were responsible for stalling the program last year. In an attempt to resolve the issue, Finance Minister Ishaq Dar shared the fuel subsidy plans with the fund last month.
Despite these efforts, there is no indication that Pakistan will reach a staff-level agreement with the IMF in the near future. It is essential for the government to not only address the concerns raised by the IMF but also to demonstrate its commitment to implementing necessary reforms in order to secure the bailout package and ensure the country’s financial stability.