ISLAMABAD: A day after the government successfully reached a staff-level agreement with the International Monetary Fund on a nine-month bailout package, the finance ministry announced to defer its plan of issuing international bond of $1.5 billion.
During a press briefing, Caretaker Finance Minister Dr Shamshad Akhtar said that the postponement decision of new international bond was taken due to high-interest rates and costly market conditions. She added that Pakistan will have to continue attaining more IMF loan programmes because the economy remains in a fragile condition.
Dr Akhtar also talked about key aspects of the IMF agreement. She pointed out that regular tariff adjustments would take place. The FM added that a gas price hike would occur in January to avoid accumulation of circular debt in gas and power sectors. The approval of the staff-level agreement has taken the total releases under the $3bn programme to $1.9bn – leaving $1.1bn for final review.
Regarding power rates, she said that electricity and gas rates would be continuously revised. It is pertinent to mention that the process of transferring the management of gas & electricity to the private sector would continue in parallel.
Other important points outlined by Caretaker FM were:
- The need for Pakistan to adhere to the market-determined exchange rate.
- Pakistan has to be responsive through adequate monetary policy adjustment.
- Four more state-owned enterprises (National Highway Authority, Pakistan National Shipping Corporation, Pakistan Broadcasting Corporation, Pakistan Post) have to be aligned with the newly approved SOE law.
She also believed that the successful staff-level agreement would lead Pakistan to secure more financial help including $350m loan from the World Bank, $350m loan from Asian Development Bank, and $250m loan from Asian Infrastructure Investment Bank.
Pakistan would pay back the $1 billion international bond debt in April next year. If the high interest rate was accepted, the debt would have reached $1.5 billion.