The International Monetary Fund (IMF) has reportedly agreed to the continuation of Prime Minister Shehbaz Sharif’s fuel subsidy for existing beneficiaries, but has asked Pakistan not to expand the programme to additional consumers.
According to sources, Pakistan and the IMF are continuing negotiations, while the Fund has so far not agreed to a reduction in the petroleum levy on petrol and diesel.
Sources said the IMF has agreed to provide the subsidy to existing beneficiaries but wants the government to keep the programme limited to motorcycles, three-wheelers and vehicles with engine capacities of up to 800cc. The current scheme provides targeted relief to these categories.
The IMF mission is scheduled to meet Petroleum Division officials again, with the Pakistani delegation expected to be led by the petroleum minister.
The discussions are also expected to cover the gas tariff structure, circular debt in the gas sector and other energy-related issues. Pakistan and the IMF have also begun work on preparing the Memorandum of Economic and Financial Policies (MEFP).
Sources said IMF officials are holding discussions with officials from the Petroleum Division and Power Division, while another meeting with Finance Ministry officials is also expected.
Meanwhile, the IMF is reportedly seeking the deregulation of the sugar sector with the consent of the provinces. However, Sindh has objected to the proposal, arguing that the federal government’s sugar policy would interfere with provincial autonomy.
Due to Sindh’s reservations over the proposed deregulation of the sugar sector, a final decision on the sugar policy has yet to be reached.
