ISLAMABAD: The International Monetary Fund (IMF) has agreed in principle to the government’s fuel subsidy for consumers, but has demanded that the scheme remain restricted to small vehicles and that no additional beneficiaries be added.
The IMF mission has also called for deregulation of the sugar sector and sought the withdrawal of tax exemptions for electric vehicles under the government’s auto policy, as negotiations continue over Pakistan’s economic and fiscal policy framework.
According to sources, the government has started work on preparing economic and fiscal policies in line with IMF conditions, while separate discussions with the Petroleum Division and Power Division are also continuing.
The IMF is pressing for deregulation of the sugar sector, but the issue remains unresolved due to opposition from Sindh. The provincial government has reportedly termed the federal sugar policy an interference in provincial autonomy.
The IMF mission is scheduled to hold another meeting with Ministry of Finance officials as part of ongoing discussions.
On the fuel subsidy, the IMF has agreed to the government providing relief to consumers under the Prime Minister’s fuel subsidy scheme, but has set conditions on its scope.
According to sources, the IMF has demanded that the number of beneficiaries should not be increased and that the subsidy should remain limited to small vehicles.
The condition is significant for the government’s planned fuel relief programme, which targets non-commercial users, particularly owners of motorcycles, three-wheelers and small cars.
The IMF mission will also hold another meeting with officials of the Petroleum Division, with the petroleum minister expected to lead the Pakistani delegation.
Gas tariff structure and the circular debt in the gas sector are expected to be discussed during the meeting. The talks come amid broader efforts to address structural issues in the energy sector and improve the financial position of state-owned entities.
The IMF mission is also scheduled to meet officials of the Privatisation Commission. Privatisation of distribution companies (Discos) and measures to reduce transmission and distribution losses are expected to be discussed.
Meanwhile, negotiations between the IMF mission and the Federal Board of Revenue (FBR) have been completed, according to sources.
The ongoing discussions are part of Pakistan’s efforts to finalise economic and fiscal measures under the IMF programme, with the energy sector, taxation, privatisation and sectoral reforms remaining key areas of negotiations.
