Finance Minister Shaukat Tarin said on Wednesday that Pakistan is in talks with the International Monetary Fund (IMF) to try to ease “tough conditions” on a $6 billion loan.
“The targets they’ve set for us are difficult… We’ve talked to them, and they’re very sympathetic,” Tarin said, referring to a loan agreed to under an IMF program Pakistan joined in 2019.
Pakistan did not want to leave the program, but had asked the IMF to give it “some breathing room,” Tarin said at a press conference.
Tarin was appointed last month as the fourth finance minister in Prime Minister Imran Khan’s two-year tenure, during which the country’s economy has tanked.
Tarin elaborated on Pakistan’s experience with the IMF’s Extended Fund Facility, saying Khan’s government was already struggling to stabilize the country’s impoverished economy when the coronavirus pandemic struck.
Pakistan is experiencing a surge in COVID-19 deaths and infections, prompting the government to shut down non-essential businesses and transportation for nearly two weeks beginning May 5. The goal is to prevent the spread of new coronavirus infections during the Muslim festival of Eid al-Fitr, when hundreds of thousands of people will offer mass prayers.
“It has tough conditions,” Tarin said of the IMF’s benchmarks, which include tax reform and measures to generate funds from other sources to bridge the country’s budget deficit.
The IMF’s country office did not respond immediately.
Since the start of the IMF program, Pakistan has raised electricity prices several times.
“We don’t have room for tariff increases,” Tarin said, adding that the government would implement additional tax reforms in the upcoming budget.
“Our people are sick and tired of rising inflation,” he stated.
The budget for the fiscal year 2021-22 is just weeks away, and the IMF approved a $500 million disbursement for budget support in March after completing a review of the loan program that had been delayed by more than a year.
Consumer price inflation in the South Asian nation of 220 million people reached 11.1 percent in April, the highest level in 11 months.
Pakistan’s economy contracted 0.4 percent last year, and growth projections for fiscal year 2020-21 have been revised to 3 percent. The IMF, on the other hand, predicts that Pakistan’s economy will expand by only 1.5 percent, implying that the country’s economic growth expectations may need to be reduced.