Shehbaz warns of inflation post-IMF deal

Prime Minister said that he hoped the matters with the International Monetary Fund will be settled in the next few days…reports Asian Lite News

Pakistan Prime Minister Shehbaz Sharif on Wednesday admitted that there will be more inflation as a result of the possible agreement with the International Monetary Fund (IMF), a media outlet reported.

Addressing a press conference, the Prime Minister said that he hoped the matters with the IMF will be settled in the next few days.

He informed the media that matters with the IMF are in their final stages, Samaa TV reported.

The government has tried that the mini budget does not impact the poor population.

Most of the taxes through the mini budget have been imposed on luxury goods, he was quoted as saying by the media outlet.

In the supplementary financial budget, tobacco and luxury items have been taxed.

The Prime Minister said that the IMF has reduced some subsidies, and asked to facilitate the poor only. There will be some difficulties after the IMF programme, he admitted, the report added.

Prime Minister Shehbaz Sharif, while addressing a federal cabinet meeting in Islamabad on Wednesday, said that austerity measures are the government’s top priority, Pakistani daily Express Tribune reported.

“Time is calling for us to adopt restraint, simplicity and sacrifice,” he said while addressing the meeting.

Prime Minister Shehbaz stressed that “everyone including the ministers, advisers and bureaucrats will have to be part of the austerity campaign” adding that the government “has tried its best to fulfil its duty”, the newspaper reported.

“Instead of looking back,” he said, “we must renew our resolve to move forward today”.

As the government seeks to revive the IMF programme, Pakistan has also sought to secure assurances from Saudi Arabia and China for more loans.

$700m from Chinese bank

In a boost to the forex reserves, Pakistan Finance Minister Ishaq Dar announced on Wednesday that the Board of China Development Bank has approved a $700 million facility for Pakistan, The News reported.

“This amount is expected to be received this week by State Bank of Pakistan which will shore up its forex reserves!” tweeted finance minister Dar, adding that the formalities have been completed.

On the issue of refinancing of commercial loans from Chinese banks, one top official of the government informed The News that they were hopeful that all Chinese matured loans would be refinanced soon.

However, according to official sources, two more commercial loans were expected, including $500 million and $800 million.

So in totality, Pakistan is eyeing to get re-financing of Chinese loans up to $2 billion by the end of February or the first week of March 2023, The News reported.

Pakistan is stuck in a dire balance of payment crisis and needs to secure the $1 billion tranche under the $6.5 billion Extended Fund Facility from the International Monetary Fund (IMF).

One of the demands of the global lender was that Pakistan needs to secure additional external financing avenues.

Apart from this, the IMF is also demanding slapping additional power surcharges and hiking the policy rate from Pakistan, The News reported.

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