Despite failed talks, Miftah Ismail reiterates commitment to revive IMF programme

• "Govt committed to reviving IMF programme and put Pakistan back on a sustainable growth path," Miftah says.
• Finance minister reveals significant slippages in FY22, caused in part by fuel subsidies.
• Says Pakistan discussed targets for next fiscal year with IMF.

ISLAMABAD: Following the conclusion of talks with the International Monetary Fund (IMF), Federal Minister for Finance and Revenue Miftah Ismail Wednesday termed the discussions “useful and constructive”.

Sharing details of the parleys with the Fund, where both sides failed to reach a staff-level agreement for the revival of the $6 billion programme due to the government’s reluctance to remove fuel subsidies, Miftah said: “[The] government is committed to reviving the IMF programme [and] put Pakistan back on a sustainable growth path”.

The talks held in Doha, Qatar, from May 18 to 25 ended on a note of disappointment. Miftah and IMF’s Mission Chief to Pakistan Nathan Porter led their respective delegations.

In a handout, the IMF emphasised upon “urgency of concrete policy actions, including removing fuel and energy subsidies”.

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Endorsing their stance, Miftah said that the IMF team emphasised the importance of rolling back fuel and power subsidies, which were given by the previous administration in contravention of its agreement with the Fund.

“We discussed significant slippages in FY22, caused in part by the fuel subsidies given in February 2022,” he wrote on Twitter, adding that the two sides also discussed targets for FY23.

The finance minister wrote: “We discussed targets for FY23, where, in light of high inflation, declining forex reserves and a large current account deficit, we would need to have a tight monetary policy and consolidate our fiscal position".

“Thus [the] government is committed to reducing the budget deficit in FY23,” he added.

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Last night, in its statement, the IMF said that its staff level team “looks forward to continuing its dialogue and close engagement with Pakistan’s government on policies to ensure macroeconomic stability for the benefit of all Pakistani citizens”.

“On the fiscal side, there have been deviations from the policies agreed in the last review, partly reflecting the fuel and power subsidies announced by the authorities in February,” said the IMF. The team emphasised the urgency of concrete policy actions, including in the context of removing fuel and energy subsidies and the FY23 budget, to achieve programme objectives, stated the Fund.

One senior Pakistani official told The News that the IMF and Pakistani side would continue talks early next week to gauge the progress on the elimination of fuel subsidies that could pave the way for completion of the seventh review and release of a $1 billion tranche under the EFF programme.

— With additional input from Mehtab Haider