Desperate for bailout, Pakistan to seek US help for staff-level agreement with IMF

Sources within the Finance Ministry familiar with the development said that the incumbent government has decided to seek Washington's help as the majority of the demands of the fund have been completed. "There is no need for further delay in the staff-level agreement", ARY news reported.

They further say Finance Minister Ishaq Dar will talk with the US envoy this week. It has been learned that there are chances of a staff-level agreement between Pakistan and the IMF this week.

The virtual talks are also scheduled on Monday with the International Monetary Fund, ARY news reported.

Sources further claimed that officials from the State Bank of Pakistan and IMF had held talks on Thursday. They discussed the points finalised in the Memorandum of Economic and Financial Policies.

The International Monetary Fund (IMF) had asked Pakistan to implement demands before reaching a staff-level agreement for the revival USD 7 billion Extended Fund Facility (EFF) stalled for months.

The State Bank of Pakistan (SBP) raised the monetary policy rate by 300 basis points to 20 per cent - one of the pre-conditions of the International Monetary Fund.

"This decision reflects deterioration in inflation outlook & its expectations amid recent external and fiscal adjustments. MPC believes this outlook warrants a strong policy response to anchor inflation expectations around the medium-term target of 5-7 per cent," the statement said.

"MPC noted that reduction in CAD is important but requires concerted efforts to improve the external situation. It emphasized that any significant fiscal slippage would undermine monetary policy effectiveness in achieving the price stability objective," the SBP added.

Pakistan accepted another pre-condition of the International Monetary Fund (IMF) for the revival of the USD 7 billion Extended Fund Facility (EFF) as the government agreed to increase electricity rates for consumers of K-Electric (KE) and the agricultural community.

According to documents, implementing a uniform tariff will increase electricity rates by an average of PKR 3.21 per unit.

The residential consumers using over 100 will be charged Rs1.49 per unit and those consuming 700 units will pay PKR 3.21 per unit. Meanwhile, the power tariff for temporary residential customers and industrialists will be increased by PKR 4.45 per unit.

The government also decided to increase electricity rates by PKR 1.55 for consumers on a quarterly basis. It has also been selected to increase the quarterly rate of customers from July 2022 to September 2022.

The federal government raised the power tariff for agricultural consumers and withdrew the subsidy under the Kissan package to meet International Monetary Fund (IMF) terms.

The subsidy given to agricultural consumers of PKR 3.60 per unit under the Kissan Package has been withdrawn. Agricultural consumers now have to pay PKR 16.60 per unit for power tariffs. (ANI)