Reasons are technical as well as political
The talks between a Pakistani delegation and an IMF team have failed to make headway, leaving the 6th review of the IMF programme for Pakistan inconclusive.
However, room for further discussions still exists and the round of talks could be extended to next week as the Pakistani delegation is expected to prolong its stay in Washington DC.
Hence, it is a deadlock and not a failure, according to officials sources.
It is the second round of talks that began on October 4 and was scheduled to end on October 15. The first round on the 6th review was held in June and remained inconclusive.
The deadlock comes despite Pakistan having increased prices of electricity, gas, and petroleum products in, what is believed, an attempt to implement the IMF conditions.
PMLN President Shehbaz Sharif has claimed that the talks “failed” because the federal government had already increased prices before concluding negotiations with the IMF.
Other reasons have also been reported for the inconclusive talks.
The IMF would disburse a loan tranche of $1 billion when it concludes the review with Pakistan.
Finance Minister Shaukat Tarin led the Pakistani team for the talks with the IMF.
SAMAA TV reported that the Pakistani team briefed the IMF officials about increased tax collections, decreasing circular debt, and the hike in gas tariffs. However, the IMF officials were not satisfied even after the prices of electricity and petroleum products were increased, and the October 15 deadline ended without both sides arriving at a conclusion, it said.
In a last-ditch effort to salvage the negotiations, Tarin met with IMF managing director Kristalina Georgieva and US Assistant Secretary of State for South and Central Asia Donald Lu, but his meetings remained “unproductive,” The Express Tribune said.
The parties failed to reconcile the Memorandum of Economic and Financial Policies (MEFP). It is a document that lays down the macroeconomic framework for the country implementing the IMF programme.
There is no word from officials on the reason for the inconclusive talks. However, it could be technical as well as political.
The MEFP should have been reconciled at the earliest stage of the talks, sources privy to the negotiations say. The document requires extraordinary expertise as inserting wrong or unviable figures could result in the suspension of the IMF programme.
The IMF and Pakistani teams differed on key projections and the increase in prices. The IMF is said to have demanded a further hike in the electricity tariff on the account of petroleum prices hike.
Muzammil Aslam, the spokesperson for the minister of finance, has said that the finance secretary was to extend his stay in Washington to finalise talks with the IMF.
He said the talks would resume on Monday and would be concluded within the next few days, but there was not deadline for the talks to conclude.
PMLN’s Shehbaz Sharif blamed the failure on the government’s “flawed strategy.”
He said the government had increased the prices beforehand and consequently its talks with the IMF ended in failure.
The government deceived the people and caused confusion for the IMF, he said.
After the failure of the talks, the government should withdraw the increase in prices, the PMLN leader demanded.
Other people have linked the inconclusive talks with Pakistan’s support for the Taliban in Afghanistan, warning that it did not augur well for the country in view of the FATF meeting scheduled for the next week.
Financial writer Khuram Husain tweeted, “IMF talks end without an agreement. Next week FATF meetings commence. Meanwhile, Shaukat Tarin’s tenure as FM expired yesterday.”