ISLAMABAD: Pakistan’s finance minister Shaukat Tareen said on Friday he was looking forward to constructive discussion with the International Monetary Fund (IMF) this month to secure the release of $1 billion under the $6 billion Extended Fund Facility.
The IMF board is scheduled carry out a weeklong review of its Pakistan program starting October 11.
A Pakistani delegation, led by the finance minister, will hold staff level discussions with IMF officials in Washington to thrash out pressing issues like revenue collection and increase in electricity tariffs to tackle the burgeoning circular debt.
A successful conclusion of the talks will lead to an immediate disbursement of $1 billion by the IMF.
“I’m hopeful that we will have constructive discussion with the IMF and we’ll reach a solution,” the finance minister said during a media briefing on Friday while focusing on soaring inflation and the country’s overall economic situation.
Listing issues that would be discussed with the IMF during his Washington visit, Tareen said Pakistan would inform the global lender about the country’s progress in revenue collection and reforms in the power sector.
He said Pakistan had promised the IMF to collect Rs5.8 trillion in revenue in this fiscal year, adding that the government was “sure to surpass that target after looking at the current numbers.”
“Therefore, there is no major issue here,” he said.
The minister, however, admitted there were challenges in the power sector as the circular debt had ballooned to a historic high of Rs2.3 trillion.
“We are preparing proposals to tell them that increasing the tariff is not the only solution to the problem,” he continued.
“The solution to the problem is that there could be different permutations, and one of them is that usage [of electricity] increases with the industrial growth, surplus electricity is used, but this will take time,” he said.
Tareen said Pakistan wanted to buy some time from the IMF to resolve the power sector issue as they would present “some formulas” to solve the problem without increasing the tariff.
He said the electricity tariff increase would burden the poor, adding if the government decided to protect the poor by offering subsidies the mechanism would still hit the industry.
“The industry becomes uncompetitive [through tariff increase] and the cycle again hits the poor in terms of increase in prices and this leads to inflation,” he added.
