Doha: Following the conclusion of negotiations between the government and the International Monetary Fund (IMF), the IMF has tied Pakistan’s $3 billion economic aid package to the elimination of gasoline subsidies.
Despite a week of deliberations in Doha, Qatar, from May 18 to 25, the Pakistani team failed to persuade the IMF, as both parties were unable to achieve a staff-level agreement.
According to reports, the IMF has refused to provide money to Pakistan unless all gasoline subsidies are eliminated. The reduction of gasoline price subsidies has been related to the $3 billion economic assistance scheme for the Pakistani government.
Pakistan is hoping for a $3 billion loan from the IMF. That sum would boost the country’s foreign-exchange reserves, which now stand at $10.2 billion, just enough to cover two months’ worth of imports. This year, the government faces a $45 billion trade imbalance.
The government had banked its hopes on the program’s reinstatement, which was intended to restore stability to the financial markets, the rapidly falling Pakistani rupee, and the rapidly dwindling foreign currency reserves.
Following the negotiations, Nathan Porter, the IMF’s Mission Chief for Pakistan, stated the Fund had “productive conversations” with Pakistani authorities in order to establish an agreement on policies and reforms.