In a recent development, Saudi Arabia has pledged $2 billion deposits to Pakistan, which has been confirmed by the International Monetary Fund (IMF). However, media reports suggest that fuel subsidy is becoming an obstacle in the agreement with the IMF, and the government has yet to prepare any strategy to overcome this hurdle.
According to the Minister of State for Finance, Ayesha Ghaus Pasha, a staff-level agreement with the IMF will be reached once the conditions regarding foreign funding are met. In addition, the World Bank has released a report on Pakistan’s economic development, stating that Pakistan can achieve ‘sustainable growth’ only through economic reforms, such as eliminating subsidies on electricity and petrol.
Pakistan is now waiting for a response from the United Arab Emirates (UAE) regarding an additional $1 billion deposit, which is necessary to reach a staff-level agreement with the IMF. Saudi officials are expected to make a formal announcement during Prime Minister Shahbaz Sharif’s visit to Saudi Arabia, as the KSA has always helped Pakistan in difficult situations.
Finance Minister Ishaq Dar is expected to hold further talks with IMF and World Bank officials, but the final date for talks has not been revealed yet. The program is likely to be extended for three to six months, but no formal decision has been taken.
The World Bank report suggested that Pakistan should reduce traditional regressive subsidies to achieve sustainable growth and that austerity measures should reduce government staff and operational costs.
