In the midst of a standstill over the IMF’s criteria for reviving the $6 billion loan program, Washington has “agreed” to assist Islamabad in negotiating a deal with the lender, according to a Daily story published on Monday.
Following rumors that senior Pakistani officials met with the US envoy in Islamabad last week, this development has occurred.
Despite the government’s harsh decision to withdraw subsidies on petroleum goods, talks with the IMF have failed, and the Fund continues to insist on doing more, despite the fact that Islamabad has become a “desperate borrower” due to a lack of foreign currency reserves.
Top official sources told The News on Friday that the IMF staff had not yet shared the first draught of the Memorandum of Financial and Economic Policies (MEFP) with Pakistani authorities, which is a requirement for moving forward with the signing of the staff-level agreement because it serves as the foundation for both sides to reach an agreement.
Finance Minister Miftah Ismail and State Minister for Finance Aisha Ghaus Pasha met with the US ambassador on Thursday to discuss this, according to the article.
It was said in the publication that it would not be adequate since Islamabad would have to establish ‘contacts’ with US Treasury high-ups in order to muster the necessary support after developing a framework on which both parties could make progress toward signing the MEFP treaty.
“No one could help Pakistan without broader agreement on the basis of the framework,” the person said, citing an example in which once the framework was agreed upon, Washington’s assistance could only be sought on one or two crucial outstanding issues between the two sides.
They believed that in the past if both sides couldn’t reach an agreement on the exact parity of the exchange rate, significant countries like the US or the EU could be enlisted to help.
Washington wields enormous influence over the IMF as the largest shareholder.
The two sides were still working on the details of the new Personal Income Tax (PIT) rates for the salaried class, the projection of Rs. 750 billion petroleum charge, the working out of power sector, and Utility Stores Corporation (USC) subsidies for the next budget.
To read our blog on “In ’72 hours,’ a breakthrough is expected in Pakistan-IMF discussions,” click here.