ISLAMABAD: Pakistan and the International Monetary Fund (IMF) on Wednesday are holding talks over possibility of securing a fresh loan worth $5 billion for the cash-starved economy.
A review mission of the IMF headed by Jafferey Frank is currently visiting Pakistan to discuss the macroeconomic situation.
Pakistan’s delegation, headed by the Finance Minister Ishaq Dar, has informed the mission team that the government has increased GST by one percentage point while efforts will be made to shrink the budget deficit by 2.5 percentage points by the next fiscal year.
Dar said that the government intends to revive the economy which was why in the recently announced Federal Budget development spending has been increase significantly.
Finance ministry sources said that possibility of securing a fresh loan worth $5 billion was also discussed keeping in mind the current balance of payment position. However, the government has decided not to accept the condition of quarterly increase in the gas and power tariffs, they added.
Sources said that if the talks were not materialized with the IMF then the government would make efforts to obtain a ‘Letter of Comfort’ from IMF which would make it easier to secure loans from other international lenders like the World Bank and the Asian Development Bank.
It is pertinent to mention that Islamabad had secured $7.5 billion from the IMF in 2008. By June 24, Pakistan has to pay last re-payment of $350 million to the IMF in the outgoing fiscal year while next year Islamabad has to make repayments worth $3 billion.