Saul Loeb—AFP
Following new Finance Minister Ishaq Dar’s slashing of consumer fuel prices last week, the International Monetary Fund (IMF) on Monday clarified that policy commitments made by authorities in Pakistan earlier this year to revive a suspended Extended Fund Facility continue to apply.
“Policy commitments made by the Pakistani authorities as part of the Seventh and Eighth reviews under their IMF-support program continue to apply,” IMF representative in Islamabad Esther Pérez Ruiz told the Reuters news agency. Referring to potential relief in light of the devastation caused by this year’s floods, she said policy discussions, including those on targeting support for flood-hit communities while maintaining macroeconomic stability, would commence in the near future after an initial damage assessment report has been completed.
Last week, Dar—who recently replaced Miftah Ismail as finance minister—reduced the price of petrol by Rs. 12.63/liter in light of a global decline in oil prices. Part of the decrease was linked to a Rs. 5 decrease to the PDL, which went against Ismail’s commitments to the IMF that had called for the PDL to be increased every month until it reached a maximum permissible value of Rs. 50/liter. While Dar’s move has been hailed among the public as a measure of relief, it has attracted the ire of his predecessor, who recently described the price reduction as “reckless.”
In an interview with Geo News on Monday night, Dar rebuffed Ismail’s criticisms, stressing he knew “how to handle the IMF” and no one else should worry about the viability of the bailout program. “Miftah is my colleague but he has his own point of view and I have mine,” he said, stressing he did not believe flood-and-inflation-weary people should be burdened any further. Pakistan has reportedly requested the IMF managing director to grant a three-month freeze on the PDL and fuel costs on electricity to help the country tackle the financial crisis emerging from this year’s floods, but the global lender has yet to formally either permit or reject the proposal.
In the same interview, the finance minister also claimed that the “actual value” of the Pakistani rupee was around 200 to the U.S. dollar, vowing to curb market manipulation that had undervalued it. Dar—often criticized for market manipulation to artificially strengthen the currency—also stressed that the Pakistan Bureau of Statistics was an “independent institution” and would not have any role in currency manipulation.