IMF Wants Roll Back of Fuel and Power Subsides for Bailout Revival

IMF Wants Roll Back of Fuel and Power Subsides for Bailout Revival in 2022

The International Monetary Fund (IMF) puts pressure on Pakistan to withdraw the aid package announced by former Prime Minister Imran Khan. According to sources, the demands include an increase in power and fuel prices, a reduction in subsidies, the end of the tax amnesty scheme for the industrial sector, and an increase in tax rates to revive the loan program.

The talks between Pakistan and the International Monetary Fund (IMF) are currently underway as part of the seventh review of the loan program; if the negotiations are successful, the IMF will release a $1 billion tranche.

According to sources, the IMF team is pressuring Pakistan to make difficult decisions for the coalition government. One of the key IMF demands is that the relief package announced by former Prime Minister Imran Khan on February 28 be withdrawn. The former prime minister announced in the box that petroleum prices would remain unchanged until June 2022.

According to official estimates, the government must pay a monthly subsidy of Rs. Seventy billion to keep petroleum product prices stable. The government has also removed the sales tax on all petroleum products, which was previously the largest contributor to sales tax collection. The former prime minister also promised to make electricity more affordable by providing an Rs. 5 per unit subsidy.

According to sources, the IMF wants to raise the prices of electricity, petroleum products, and natural gas to restart the loan program. The IMF also wants to put in place a system in Pakistan that requires all cabinet members, elected and non-elected, to declare their assets.

The new coalition government is also under pressure from the international lender to raise income tax rates, which the previous government refused to do.

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