Reasons behind postponement of Pakistan-IMF talks; Dar’s policies backfired: sources
Pakistan-IMF talks were postponed once again after the global financial institution expressed displeasure over Finance Minister Ishaq Dar's policies
Negotiations between Pakistan and the International Monetary Fund (IMF) for the ninth review of the extended fund facility (EFF) programme have been postponed once again.
The negotiations rescheduled from November 4 to November 15 are likely to be postponed again by November 21st.
The economic circles told News360 that the economic policies of Finance Minister Ishaq Dar are no longer trusted by the IMF. Former Finance Minister Miftah Ismail restored the trust between the Pakistani government and the IMF which was damaged after the transfer of portfolio to Ishaq Dar and a shift of economic policies.
Former finance minister Dr Miftah Ismail had also expressed concerns over Ishaq Dar’s U-turn on different economic policies.
During his stay in London before assuming office, Dar was constantly critical of Miftah Ismail’s policies towards the IMF and repeatedly said that Ismail could take relief measures even while remaining in the IMF programme.
The then finance minister Miftah Ismail conveyed the message to Dar in hushed words that Nathan Porter, the IMF’s Mission Chief to Pakistan, repeatedly expressed concerns that as soon as Pakistan gets the latest tranche of the loan, the government will start granting subsidies that will widen the fiscal deficit.
Addressing the IMF’s concerns, the decision to make petrol cheaper on September 15, 2022, was deferred to September 21, 2022, and during this time, instead of making petrol cheaper by Rs10, the price of petrol has been increased by Rs1.45. The petrol price was hiked from Rs 235.98 per litre to Rs237.43 per litre.
On this occasion, instead of a depreciation of Rs4, the diesel price was kept unchanged at Rs245.73.
The then finance minister Ismail had taken the position that if the decision is taken to reduce the fuel prices, Pakistan would lose the IMF’s confidence. A week after Ismail’s decision, the finance minister’s portfolio was taken away from him and awarded to Ishaq Dar.
As soon as he arrived, Ishaq Dar announced to reduce the petrol price on October 1 by Rs12.63 per litre and diesel by Rs 12.13 per litre to Rs 235.30 per litre.
This announcement of Ishaq Dar damaged the IMF’s trust in Pakistan and from that day, the IMF started turning its eyes away. The delay in the negotiations is made for the evaluation of the economic losses after the disastrous floods in Pakistan.
Economic circles revealed that since the announcement of Ishaq Dar’s October 1 announcement, the IMF expressed displeasure over Dar’s policies and showed lack of trust due to his U-turns. They added that the global financial institution is now reluctant to arrive in Pakistan to hold negotiations for reviewing the EFF programme.
