The International Monetary Fund has advised the government to take compactmeasures to reduce the deficit of billions of rupees which thegovernment-owned entity – Pakistan International Airline – is suffering.
The global lender has suggested to the Government of Pakistan to chalk outa solid plan to turn the state-owned entity into a profit-making concern byreducing its deficit.
According to sources in the PIA, the IMF team proposed to increase theincome of the national flag carrier in order to improve its financialhealth.
They said that the PIA’s total financial deficit has exceeded Rs400 billion.
The IMF mission led by Nathan Porter is currently in Pakistan and hisholding talks with the government. The talks began on January 31 with thePakistan side headed by Finance Minister Ishaq Dar for the ninth review ofthe $7 billion bailout package.
The cash-strapped Pakistan is seeking an IMF lifeline to save the nationfrom economic collapse.
After the first round of technical talks between the IMF team and thePakistani government concluded on Friday, Prime Minister Shehbaz Sharifobserved that the lender was imposing conditions that were ‘beyond ourwildest dreams’. He said the IMF delegation was giving Finance MinisterIshaq Dar a tough time. “Our economic challenges at this moment areunimaginable. The conditions we have to fulfil are beyond our imagination.”However, he acknowledged that the country had no choice.
During its technical level talks, the IMF mission chief demanded clearaction to bridge the daunting fiscal gap — between 2 to 2.5 trillion rupees.
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The lender has set several conditions for resuming the bailout, includingan increase in power tariff, restoration of unrestricted imports andraising the petroleum development levy on diesel.
The IMF views the poor performance of the power sector, whose circular debthas reached Rs2.9 trillion, as a major threat to the economy. The IMF’sdemand to discontinue the exemption for “lifeline electricity consumers”,i.e. those consuming under 300 units, can be a widely unpopular decision asalmost 88 per cent of the country’s power consumers fall under thiscategory.
The two sides have almost completed the technical-level talks in the firstround which will be followed by the policy-level negotiations to becompleted by February 9.
The IMF after a successful ninth review would provide over USD 1.1 billionand the gesture would open venues for bilateral loans from differentfriendly countries and multilateral institutions.
Pakistan had secured a $6 billion IMF bailout in 2019, which was topped upwith another $1 billion last year.
