IMF bailout plan is unrelated to elections, official claims

• Official claims that the IMF simply sets overall general government targets.
• Claims that there is financial room within these limits to allocate spending or generate more funds for constitutional tasks.
• The Finance Ministry has advised ECP that the government lacked the resources to conduct separate province elections.

ISLAMABAD: According to The News, the International Monetary Fund (IMF) made it clear on Thursday that the ninth tranche of the Extended Fund Facility (EFF) arrangement between the lender and Pakistan was unrelated to elections.

Esther Perez Ruiz, the IMF’s Resident Chief in Pakistan:

According to Esther Perez Ruiz, the IMF’s Resident Chief in Pakistan, “Decisions on the constitutionality, viability, and scheduling of the province and general elections lie completely with Pakistani institutions.”

According to the official, the global lender sets overall government targets, and within these, there is financial room to reallocate or reprioritize spending or collect more funds to ensure constitutional tasks might be carried out as necessary.

The Finance Ministry Advice to ECP:

The Finance Ministry informed the Election Commission of Pakistan (ECP) that the nation was experiencing a severe economic crisis and that the government lacked the resources necessary to hold two provincial assembly elections separately within 90 days as required by the Supreme Court when it made its statement.

The Punjab polls were postponed by the ECP earlier this week after the finance secretary claimed a shortage of funding and the ongoing financial crisis as reasons for the delay.

Just Pakistan remains in South Asia without a bailout from the global lender, after Sri Lanka secured funding this week and Bangladesh continues to implement IMF-mandated reforms.

IMF loan package:

To restart a $6.5 billion IMF loan package, Pakistan has adopted difficult measures like raising taxes and energy costs and allowing its currency to depreciate. The money will provide some solace to a country still suffering from a dollar shortage that has increased the risk of the economy contracting before this year’s elections.

The latest announcement of a petrol assistance plan by the government did not sit well with the international lender either. thereby making it more challenging for the nation to obtain the staff level agreement.

Earlier this week, State Minister for Petroleum Musadik Malik declared that the federal government had decided to subsidise gasoline up to Rs. 100 for motorcyclists and owners of vehicles up to 800cc in order to lessen the impact of high gas prices on the population, which has been hit hard by inflation.

“According to the minister, a comprehensive approach will make subsidised gasoline available to motorcyclists and owners of cars with engines up to 800cc.”

The IMF, however, claims that the Pakistani government did not seek its advice before providing low-income groups with a gasoline subsidy.

The government’s idea to boost fuel costs for more affluent drivers to pay for a subsidy for those with lower incomes, according to Esther Perez, the IMF’s resident representative for Pakistan, was not discussed with the lender, she told the journal.

According to Perez, the fund staff is looking for further information on the scheme’s operation, cost, targeting, safeguards against fraud and abuse, and mitigating measures. They will carefully address these aspects with the authorities.