IMF Rejects Pakistan's Economic Reforms: PIA Debt Issue

Islamabad, Feb 6 (PTI) The IMF has not immediately endorsed the Pakistan interim government's proposals related to economic reforms and also asked why it is showing haste when the top poll body has already barred it from taking any decision regarding privatisation of the ailing state-owned airlines, a media report said on Tuesday.

The International Monetary Fund (IMD) on Monday did not immediately endorse the interim government's proposals to reduce industrial electricity prices, settle over one-fifth of the circular debt and make the Rs 268 billion debt of the Pakistan International Airlines (PIA) part of the public debt, The Express Tribune newspaper reported.

The IMF held two back-to-back virtual meetings but their outcomes were below the expectations of the Pakistani authorities, the newspaper said, quoting sources, and that the global lender sought more details about the economic and legal viability of the three major proposals.

The IMF also asked as to why the interim government is showing haste when the Election Commission of Pakistan (ECP) has already barred it from taking any decisive action on the privatisation of PIA, according to government sources, it said.

The next round of discussions on these proposals would take place after the Pakistani authorities provide additional information and the global lender reviews it internally.

The meetings took place at the request of Pakistani authorities just three days before the general elections scheduled for this Thursday. The spokesman of the Ministry of Finance, Qamar Abbasi did not respond to a question about the IMF's response to the proposals and sought more information. The IMF resident representative, Esther Perez, also did not reply, the report said.

The sources told the newspaper that the IMF's main objection to the PIA's proposed debt settlement plan was about the urgency of taking the PIA debt into the government's books.

“The government was claiming that the entity was ripe for privatisation and its future proceeds would be available to pay off the debts but still it wanted to take the Rs 268 billion on its books before the end of the caretaker setup,” it added.

The total outstanding debt of the airline is Rs825 billion, and the privatization ministry and the PIA have to seek no objection certificates from the CAA and the FBR to file a scheme of arrangement with the Securities and Exchange Commission of Pakistan (SECP).

The PIA owes Rs120 billion to the CAA. The FBR needs to recover Rs19 billion from the PIA.