Pakistan is in talks with the International Monetary Fund (IMF) to try to ease “tough conditions” on a $6bn loan, Finance Minister Shaukat Tarin said on Wednesday.
“The targets they have given us, that is tough … We have talked to them and they are very sympathetic,” Tarin said, referring to a loan agreed in an IMF programme that Pakistan entered in 2019.
Pakistan did not want to leave the programme but had asked the IMF to give “us some space”, Tarin told a news conference.
Tarin was appointed last month as the fourth finance minister in just two years of Prime Minister Imran Khan’s government, a period in which the country’s economy has nosedived.
Elaborating on Pakistan’s experience with the IMF’s Extended Fund Facility, Tarin said Khan’s government was already struggling with the stabilisation of the impoverished economy when the coronavirus pandemic hit the country hard.
Pakistan is seeing record numbers of COVID-19 deaths and infections, and so the country is to shut non-essential business and transport for almost two weeks starting on May 5. The aim is to contain the spread of new coronavirus infections during the Eid al-Fitr Muslim festival when hundreds of thousands of people will be offering mass prayers.
“It has got tough conditions,” Tarin said of the IMF’s benchmarks, which include tax collection reforms and measures to generate funds from other areas to bridge its budget deficit.
No immediate response was available from the IMF’s country office.
Pakistan has raised electricity prices several times since the IMF programme began.
“We don’t have room for tariff hike,” Tarin said, adding that the government was going to introduce more tax reforms in the upcoming budget.
“Our people are really sick of rising inflation,” he said.
The budget for the 2021-22 fiscal year is just weeks away, and the IMF approved a $500m disbursement in March for budget support after completing a review of the loan programme that had been delayed by more than one year.
The South Asian nation of 220 million people saw consumer price inflation climb to 11.1 percent in April, the highest in 11 months.
With an economy that contracted 0.4 percent last year, Pakistan has revised growth projections to 3 percent for the fiscal year 2020-21. The IMF however says Pakistan’s economy is likely to expand only 1.5 percent, suggesting the country may have to dampen its economic growth expectations.