IMF MD acknowledges dissent yet approves EFF for Pakistan

ISLAMABAD: Kristalina Georgieva, the Managing Director of the International Monetary Fund (IMF), has been reported to acknowledge that there were dissenting opinions within the IMF regarding the approval of the Extended Fund Facility (EFF) for Pakistan. However, she ultimately decided to approve the program in light of these “internal concerns.”

This information was shared by Prime Minister Shehbaz Sharif during a federal cabinet meeting on February 12, 2025, reported the Business Recorder. The Prime Minister recounted his conversation with Georgieva held at the World Governments Summit in Dubai, where she expressed significant appreciation for Pakistan’s economic team.

During discussions about the EFF for Pakistan, Sharif stated that many within the IMF expressed concerns, but Georgieva remained steadfast and approved the program. He noted that she had assured him that Pakistan’s strategy to reduce power tariffs would be carefully considered. The Prime Minister pointed out to the IMF chief that industrial growth and economic advancement are contingent upon lowering production costs. In response, she requested a plan from the Pakistani side regarding the reduction of electricity prices, alleviating fears that such a decrease would not align with the IMF’s expectations.

In light of this, the Prime Minister instructed the Deputy Prime Minister to formulate a comprehensive strategy aimed at lowering energy costs, which could subsequently be discussed with the IMF.

Prime Minister Shehbaz Sharif has already mandated the Power Division to implement a reduction in electricity tariffs by Rs 7 per unit across all consumer categories, including the industrial sector throughout the country, including Karachi. A committee dedicated to tariff reduction, led by Ishaq Dar, is actively engaged in this effort.

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The Prime Minister has expressed his wish to see these reductions in place by April 1, 2025. The Central Power Purchasing Agency (Guaranteed) – CPPA-G, which acts as the market operator, has provided initial findings to the committee, including potential savings from renegotiated or cancelled contracts with Independent Power Producers (IPPs).

Furthermore, Prime Minister Sharif informed the Cabinet that he conveyed to the IMF Managing Director that all provinces had complied with the agreement to impose agricultural income tax, a requirement that had previously seemed unattainable. He noted that Georgieva was both impressed with and satisfied by Pakistan’s reform progress and expressed a desire to visit the country.

The Prime Minister praised the economic team’s efforts concerning the IMF program, commending their hard work in negotiations that resulted in favourable terms for Pakistan.

He expressed gratitude to all cabinet members, particularly the Deputy Prime Minister, the Minister for Finance and Revenue, the Minister for Power, the Minister for Defence, the Minister for Information and Broadcasting, as well as the Chief of Army Staff, who had accompanied him at the meeting.

He also recognized the dedication of various secretaries, especially the Finance Secretary, the Secretary for Power, and the Chairman of the Federal Board of Revenue, along with other officers for their relentless efforts to stabilize and revive the economy.