There are new hopes for an early agreement signing after the International Monetary Fund (IMF) notified Pakistan that Saudi Arabia has confirmed $2 billion in extra deposits. Islamabad and the IMF have been in talks since January regarding the release of $1.1 billion from a $6.5 billion bailout plan that was decided upon in 2019.
The Pakistani government has reduced subsidies, lifted a fictitious exchange rate ceiling, increased taxes, and increased fuel prices in order to release the money. The agreement has been postponed, though, due to promises of extra funding from friendly countries.
According to reports, the Fund staff is pleased with the most recent confirmation, and the lender has notified Pakistani authorities of the development. According to the story, the Saudi government intends to make a statement in public, perhaps during Prime Minister Shehbaz Sharif’s upcoming trip to the country.
In a recent interview, the Saudi ambassador to Pakistan also made a hint that positive news would soon be released and that his nation had always stood by Pakistan in difficult circumstances. All eyes, according to the sources, are on the UAE to affirm a further $1 billion deposit from them, which could open the door to negotiating a SLA (staff-level agreement) with the IMF.
Ishaq Dar, the finance minister, is anticipated to stop in the UAE en route to the US, where he will hold discussions about the transfer of funds. The signature of the SLA with the IMF is still hampered by a further obstacle. An unexpected cross-fuel subsidy for owners of motorcycles and cars up to 800cc had been declared by the Ministry of Petroleum in collaboration with the PM Office, but it needs to be scrapped at this point.
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The proposed cross-fuel subsidy, which cannot be implemented in a hasty way, has not yet been withdrawn by the government. Such plans were taken into consideration in the past during the administration of previous finance minister Shaukat Tarin and even when Miftah Ismail oversaw the Ministry of Finance during the PDM-led administration.
Even Miftah Ismail allocated Rs 48 billion for Sasta Petrol on the eve of the previous budget, but it was unable to be carried out because such plans could not be adequately developed. The IMF used the announcement of a half-baked cross-fuel subsidy as a justification for delaying the signing of the SLA because they were still seeking clarification on how the programme would be implemented in a transparent way.
