Fate of IMF talks hinges on PM’s ‘big nod’

Fate of IMF talks hinges on PM’s ‘big nod’

The discussions between the government and the International Monetary Fund (IMF) to revive the bailout package are proceeding slowly because economic managers are still waiting for Prime Minister Shehbaz Sharif’s ‘big nod,’ which is critical to overcoming gaps with the fund.

Due to the political leadership’s indecision, Finance Minister Miftah Ismail, who was supposed to fly to Doha on Sunday, will now go on Monday. According to reports, negotiations would remain inconclusive unless political promises were made for the following fiscal year.

Dr Ayisha Pasha, Minister of State for Finance, is slated to go to Doha for the last round on Sunday.

The economic managers are still waiting for Prime Minister Shehbaz Sharif’s “major nod,” which is critical to closing the gap with the fund.

Senior members of the ruling party are unwilling to make difficult economic decisions without clear backing from the establishment. They are indicating that, in the absence of promises from the powers that be, they are prepared to call hasty elections.

ACCORDING TO SOURCES IN ISLAMABAD AND DOHA, the IMF and Pakistani authorities were unable to reach an agreement on the macroeconomic framework during technical level negotiations that began on Wednesday.

There are differing views on the budget deficit, revenue target, electricity subsidy removal strategy, spending rationalisation, and inflation and economic growth estimates. The prediction gaps can only be filled once the status of fuel subsidies and tax initiatives for the following fiscal year is known.

The discussions are set to last until May 25, with the important last session beginning on Monday.

“We’re waiting for the big yes before travelling to Doha,” Dr Ayisha Pasha, Minister of State for Finance, remarked.

Mrs Pasha stated that the finance ministry had prepared two scenarios, one based on obtaining approval from the leadership to impose difficult choices and the other on the assumption that no consent is gained, but there is a backup plan.

She also stated that the economic team would offer both possibilities to the IMF during policy deliberations.

“I would say that Pakistan and the IMF negotiations are progressing,” stated the state minister. In response to a query concerning the delay in finalising the fiscal framework, Ayisha Pasha stated that an agreement on the framework would be reached if total clarity on the unresolved problems was obtained, which would occur when the ministers arrived in Doha.

Miftah Ismail was supposed to depart Karachi for Doha on Saturday. Still, he had to travel to Lahore to persuade the prime minister of the importance of adopting outstanding decisions as soon as possible. On Saturday, Shehbaz Sharif and former President Asif Ali Zardari met to discuss the current political and economic circumstances.

Last month, the finance minister promised IMF senior management that he would begin reducing gasoline subsidies on May 1. But, like his predecessors, past finance ministers Dr Hafeez Sheikh and Shaukat Tarin, Ismail cannot keep his pledge, deepening the fund’s trust deficit.

Share this post