An IMF official said Friday that Pakistan and the IMF would sign a long-awaited loan agreement after settling a few remaining issues, including a gasoline price mechanism.
Since early February, Pakistan and the IMF have been negotiating to disburse $1.1 billion to the cash-strapped, nuclear-armed nation of 220 million.
Last week, Prime Minister Shehbaz Sharif revealed a plan to charge wealthy users more for petrol to subsidize inflation-hit poor consumers. As a result, it reached a 50-year high in February.
According to the petroleum ministry, the affluent will pay about 100 rupees (35 U.S. cents) more for each liter.
On Friday, Petroleum Minister Musadik Malik told Reuters his ministry was negotiating. He called it relief, not a subsidy.
“Larger autos cost more. So people will buy smaller, fuel-efficient automobiles “Malik.”
The IMF’s permanent representative in Pakistan, Esther Perez Ruiz, claimed the government hadn’t contacted the fund about the plan.
Ruiz told Reuters that a staff-level agreement would be inked if the fuel scheme was resolved.
She said the IMF would urge the government for further specifics, including implementation and misuse prevention.
The minister stated the plan wouldn’t cost the government.
“We can explain all this to the IMF when they ask,” he added, adding that the lender was in touch with the finance ministry.
The finance ministry did not react.
Pakistan needs the IMF to release a $1.1 billion tranche from a $6.5 billion bailout agreed upon in 2019 since its central bank’s $4.6 billion in foreign exchange reserves covers barely four weeks of imports.
The finance minister stated last month that the accord was “extremely close” after Islamabad devalued the currency, removed subsidies, and raised energy costs.
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