IMF and Pakistan in last-ditch talks as trip winds up
Pakistan's government on Thursday remained locked in crunch talks with the IMF over the release of a crucial financial bailout on the last scheduled day of the global lender's visit to the country. An International Monetary Fund (IMF) delegation landed in Islamabad last week to thrash out tough conditions that Prime Minister Shehbaz Sharif called "beyond imagination". Pakistan's economy is in dire straits, stricken by a balance of payments crisis as it attempts to service high levels of external debt amid political chaos and deteriorating security. "The IMF is clearly asking for much more than what the government is willing to do, even with a little bit of arm twisting," said economic analyst Abid Hasan, a former adviser to the World Bank, in the capital Islamabad. "Both sides are waiting for the other to blink." Finance Minister Ishaq Dar told reporters on Thursday that "a final round of talks is going on". Later on Thursday, the central bank released fresh data warning its forex reserves had plunged US$170 million in a week, standing at just US$2.9 billion as of last Friday. The IMF wants a boost to the pitifully low tax base, an end to tax exemptions for the export sector, and further hikes to artificially low petrol, electricity and gas prices meant to help low-income families. It is also pushing for Pakistan to keep a sustainable amount of US dollars in the bank through guarantees of further support from friendly nations Saudi Arabia, China and the UAE, as well as the World Bank. "There is no deadlock," Pakistan Energy Minister Khurram Dastgir Khan told local media on Wednesday. "Detailed and vigorous discussions have been held in the past 10 days." "I have full hope that these talks will be concluded successfully." Years of financial mismanagement and political instability have damaged Pakistan's economy – damage exacerbated by a global energy crisis and devastating floods that submerged a third of the country. With the prospect of national bankruptcy looming, Islamabad in recent weeks began to bow to pressure, prompting the IMF's last-minute visit. The government loosened controls on the rupee to rein in a rampant black market in US dollars – a step that caused the currency to plunge to a record low – and hiked petrol prices by 16 percent. A government official, who asked not to be named, said that the "IMF is not satisfied with the current prices of petroleum and energy". (AFP)