Negotiations between Pakistan and International Monetary Fund (IMF) remained inconclusive on Friday, as both sides decided to continue their discussions for two more days.
Progress between the two sides remained positive and the negotiations will continue till Sunday, an official notification read.
Media reports had earlier stated that Pakistan and IMF may strike a $7bn-$8bn bailout deal after the end of bilateral talks on Friday.
According to government sources, the IMF has expressed reservation over the draft agreement of loan programme with Pakistan.
“The IMF delegation arrived at the office of the finance ministry and informed about the concerns raised by the headquarters,” they said.
The Pakistani side assured the team of addressing its reservations. However, sources revealed that the deal may face a further delay if the incumbent government fails to satisfy the IMF.
They said as per the IMF’s conditions, electricity prices would start increasing from July 1 while the country would withdraw tax exemptions amounting to Rs700 billion within two years.
Sources further revealed that the government would reduce subsidies and take Rs340 billion from consumers in the energy sector, adding that the prices of gas could be raised in the second phase.
“Those government departments that are immersed in deficit will be privatised while the State Bank of Pakistan will be able to regulate exchange the rates independently,” sources said. “The rate of US dollar will be set without any pressure from the government. This implies that the government is expected to allow a further depreciation of the rupee and a further increase in the interest rate this year.”
Financial discipline would be maintained whereas non-developmental expenses would also remain limited, sources concluded.