IMF asks govt to do away with subsidies

Pakistan will be holding economic review meetings with the IMF next month to get its program back on track


Irshad Ansari September 29, 2021
International Monetary Fund logo is seen outside its headquarters during the IMF/World Bank spring meetings in Washington, U.S., April 20, 2018. PHOTO: REUTERS

ISLAMABAD:

The International Monetary Fund (IMF) has proposed Pakistan eliminate unnecessary subsidies on electricity, gas, flour, sugar, pulses, and other essential commodities and limit these grants to deserving people only.

Pakistan will be holding economic review meetings with the IMF next month to get its program back on track with the international lender. Sources said that the IMF is urging Pakistan to remove subsidies on flour, ghee, sugar, pulses, and rice as well as electricity and gas to establish financial discipline while the government is trying to get relief from the IMF on the conditions related to subsidies on essential commodities.

Read IMF talks on Oct 4 for release of $1b tranche

The IMF is urging Pakistan to give targeted subsidies only to the beneficiaries of the Ehsaas program. Sources said that Pakistan’s talks with the IMF will include a review of the economy, achievement of targets, subsidies, tariffs, and the circular debt situation.

The sources added that if the talks succeed, the government will not only be given a $1 billion loan from the IMF but will also be able to secure financing from the Asian Development Bank (ADB) and the World Bank.

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