The International Monetary Fund has made massive demands from the government including hikes in the price of electricity and gas as talks over a stand-by agreement approach conclusion. However, the government is still hopeful of meeting the requirements and getting a deal done on Tuesday.
In a pivotal development, sources reveal that the IMF has requested significant assurances regarding proposed measures, including direct involvement from the upper echelons of the government, including the Prime Minister himself.
The conditions set forth by the IMF encompass an increase in the prices of electricity and gas, alongside the implementation of a special scheme aimed at bringing small retailers into the tax net.
Despite the weighty demands, the IMF team has expressed confidence in the Federal Board of Revenue (FBR), believing that it will successfully meet the ambitious Rs9,415 billion revenue target by June 30.
Finance Ministry’s Optimism and Contingency Plans
Sources within the Finance Ministry have disclosed that provinces have agreed to collectively raise an additional Rs600 billion in revenue, a move aimed at addressing the IMF’s requirements.
Finance Minister Muhammad Aurangzeb recently chaired a meeting to review the progress with the IMF. Expressing a willingness to comply with the IMF’s demands, Aurangzeb indicated a positive outlook towards reaching an agreement.
However, the Finance Ministry has also initiated discussions on contingency plans should the second review with the IMF not reach a resolution.
Informal Discussions on Extended Fund Facility
In a strategic move, the government is planning to informally raise the topic of an extended fund facility with the IMF. This proposition is expected to be formally presented at the upcoming annual meeting of the IMF and World Bank.
With the Finance Ministry’s optimism and the government’s willingness to address the IMF’s demands, all eyes are now on the upcoming Tuesday deadline, as a potential deal hangs in the balance.
