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HomeNationalGovt vows to stand up to IMF on subsidies

Govt vows to stand up to IMF on subsidies

Finance Minister Miftah Ismail said on Monday that he would convey to the International Monetary Fund (IMF) that fuel and energy subsidies – which were introduced by the previous PTI government – could not be reversed as the “nation cannot endure it”.

Ismail, who is due to leave for Doha today to participate in talks with the IMF for the resumption of a $6 billion loan programme that has been stalled since early April, told media persons in Karachi that Prime Minister Shehbaz Sharif and PML-N supremo Nawaz Sharif had ruled out the possibility of ending the subsidies. He said that according to the deal finalised by former finance minister Shaukat Tarin, Pakistan would have to raise the price of diesel by over Rs150 and petrol by Rs100.

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“It will not happen. I have refused. Shehbaz Sharif sahb has refused. Nawaz Sharif sahb has refused,” Ismail added. “I am assuring you that I will not agree to [the terms] that Shaukat Tarin agreed.” The PTI had announced a four-month freeze (until June 30) on petrol and electricity prices on February 28 as part of a series of measures to bring relief to the public.

The PML-N had severely criticised former prime minister Imran Khan’s government for “derailing” the IMF programme through these subsidies but despite being at the helm for over a month, it has not reversed them. The finance minister has repeatedly said these subsidies are not feasible and are costing the government billions. The IMF has made the resumption of its programme with Pakistan, along with a $2bn expansion, conditional on the reversal of these subsidies.

A team comprising State Bank of Pakistan and Federal Board of Revenue officials, as well as Minister of State for Finance and Revenue Dr Aisha Ghous Pasha and the finance secretary, are already in Doha to negotiate with the IMF. The talks began on May 18. At the time, Ismail had told the IMF that the government understood the current economic crisis and agreed that it would have to take “tough decisions” while mitigating the effects of inflation on middle to low-income groups.

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Ismail told the media on Monday that he would be joining policy-level talks that would span two to three days. Imran and his finance minister Tarin were responsible for Pakistan finding itself in a difficult place with regards to the IMF agreement, he claimed. “They promised the IMF that they would not only remove [subsidies], but also impose a 30 percent tax on it,” Ismail said. However, “my prime minister has said that the people of my nation cannot endure this hike.

“So, I will go to the IMF and tell them that yes, I agree that Shaukat Tarin made this agreement. But this nation cannot endure this (end to subsidies) and ask them to give me a break.” He alleged that the previous government had agreed to the conditions with the IMF “deliberately so that I find myself in a difficult position today”. However, he would return with “good news”, the finance minister assured. “I will tell the IMF to give me in writing what they want and that I will speak to my boss in Islamabad,” Ismail said. “I will come back after finalising matters with the IMF and bring good news.”

Ismail said that in the past, the IMF team would visit Pakistan instead of a government team going to another country for talks since terrorism had reduced following operation Raddul Fasaad. “But the IMF communicated to us two to three weeks ago that their team would not visit Pakistan as they were wary and said a sit-in would be staged in Islamabad by Imran Khan,” he said, adding that he had not shared this information at the time. “I believed that we would be able to convince them to come to Pakistan.”

The finance minister slammed the former prime minister, accusing him of corruption and facilitating the corrupt, particularly naming Farah Khan, a close aide of his wife Bushra Bibi.

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