IMF's demands for $7billion bailout package revealed

Following the International Monetary Fund’s (IMF) Executive Board’s approval of the Extend Fund Facility (EFF), the first tranche of $1.1 billion has been disbursed to Pakistan’s account on tough post-agreement conditions, sources said on Friday.

Sources revealed that the IMF set harsh conditions for the recently unlocked programme, including removing relief on electricity.

“According to the post-requisites of the IMF, Pakistan will revise the National Finance Commission award policy, and the Fund will monitor the policy. However, the provinces' expenses will also be checked,” sources privy to the matter revealed.

“The terms of the IMF loan programme also include that a new NCF will be signed between the federation and the provinces, which is being negotiated,” sources added.

The global loan lender restricted Pakistan from the provision of any relief like the Punjab government’s power subsidy. Moreover, Pakistan will not issue any supplementary grants. 

Sources said the IMF asked the government to extend the tax circle by bringing the agriculture, property, and retail sectors into the tax net. 

Additionally, Pakistan will not subsidise the power sector more than 1 percent of the GDP, and "if they want a decrease in power tariffs, they would have to implement reforms".

“The government will bring the new packages for the power tariff and decline in commodity prices,” it said.

However, the IMF also directed the government to resize its department to shrink the annual budget.

The aforementioned conditions surfaced after the first tranche of a $7 billion programme, consisting of 37 months, was approved by the Washington-based lender.

Earlier on Wednesday, the IMF Executive Board had approved a $7 billion Extended Fund Facility (EFF) for Pakistan.

Prime Minister Shehbaz Sharif hopes that it will be the country's final IMF programme.