The International Monetary Fund (IMF) has proposed strict austerity measures for Pakistan's development budget as the global lender raises concerns about the allocation of funds for new projects in the ongoing financial year.
In response to the IMF's austerity conditions, the authorities are considering stopping funds for new development projects.
The IMF suggests that Pakistan's caretaker government should allocate funds for ongoing projects, especially those near completion, instead of starting new ones.
As a result, the relevant authorities will need to reassess their development project priorities.
It's essential to note that the global lender has no objections to providing funds for districts affected by recent floods in Pakistan.
Additionally, the IMF has urged Pakistan to "immediately raise" gas tariffs to address losses and circular debt in the gas sector. It is seeking a 100% increase in gas tariffs.
During a virtual meeting with Pakistan's finance ministry officials, the IMF expressed concerns about the failure to increase gas tariffs starting from July 1.
They demanded that the interim government quickly approve the tariff hike while noting that not doing so would violate the Standby Agreement.
The IMF has also recommended measures to recover a loss of Rs46 billion incurred by gas companies from July to September.
The finance ministry officials informed the global lender during the discussions that Caretaker Finance Minister Shamshad Akhtar was in China but would return to Pakistan soon.
In light of these developments, an Economic Coordination Committee (ECC) meeting has been scheduled for Monday to consider approving the gas rate increase.
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