Pakistan entered into a $ 6bn debt agreement with the IMF in 2019, but the country’s new finance minister said the debt-related targets set to raise taxes and repay government spending were complex.
Pakistan is in talks with the International Monetary Fund (IMF) to address “$ 6bn” debt crisis, Finance Minister Shaukat Tarin said on Wednesday.
“The goals they have given us, are difficult… We have spoken to them and they feel sorry for us,” Tarin said, referring to the debt he agreed to in the IMF program that Pakistan entered in 2019.
Pakistan did not want to abandon the program but asked the IMF to provide us with a “place”, Tarin told a news conference.
Tarin was appointed last month as the fourth prime minister in just two years of Prime Minister Imran Khan’s administration, a time when the country’s economy has not changed.
Commenting on Pakistan’s response to the IMF’s Extended Fund Facility, Tarin said the Khan government was already struggling with the economic crisis that was causing the country’s coronavirus epidemic.
Pakistan is seeing a high death toll from COVID-19, so the country should close off business and unnecessary transport for at least two weeks from May 5. The aim is to prevent the spread of new coronavirus at Eid al-Fitr Muslim festival with thousands more many prayers.
“It’s a challenge,” Tarin said at a press conference on IMF, which includes tax reforms and revenue streams in some areas to reduce budget cuts.
He did not respond immediately from the IMF’s national office.
Pakistan has raised electricity prices several times since the IMF program began.
“We don’t have a place to raise taxes,” Tarin said, adding that the government will work out ways to increase taxes in the next budget.
“Our people are really suffering from inflation,” he said.
The 2021-22 fiscal year budget is just a few weeks away, and the IMF has approved a $ 500m cut in March to support the budget after reviewing the borrowing program that was delayed by one year.
South Asia’s 220 million people saw a rise in consumer prices to 11.1% in April, above 11 months.
With the economy gaining 0.4% last year, Pakistan has completely reversed its growth rate of 3% for the 2020-21 fiscal year. The IMF also said Pakistan’s economy should grow by only 1.5%, suggesting that the country should reduce its confidence in economic growth.