Pakistan close to finalize three-year loan program with IMF today

ISLAMABAD – Pakistan Tehreek-e-Insaaf (PTI) led federal government and the International Monetary Fund (IMF) are likely to finalize a three-year loan program today (Friday).

According to media reports, a staff-level agreement between the two is expected to range between $6-7 billion as the draft compilation is in the final phase.

Dignitaries of both the sides are expected to hold the last round of talks today in which the proposed bailout package, around $6.4 billion for three-years of duration, would be finalized.

The media reports claim that under the proposed bailout agreement that electricity prices will start increasing from July 1 while the country would withdraw tax exemptions amounting to Rs700 billion within two years.

As per IMF condition, the government will have to reduce subsidies and take Rs340 billion from consumers in the energy sector only. The prices of gas will be raised in the second phase.

Owing to the IMF conditions, the government is expected to allow a significant rupee depreciation and a key interest rate hike in 2019 as the government departments immersed in the deficit will be privatized, while State Bank of Pakistan would be able to regulate exchange rates independently. The rate of the US dollar would be set without any pressure from the government.

The IMF and the Ministry of Finance are expected to release a joint press statement if the agreement is finalised.