WASHINGTON (BLOOMBERG, REUTERS) - The International Monetary Fund (IMF) said on Monday (April 25) Pakistan agreed to reverse unfunded subsidies ahead of talks to resume a seventh review in May.
“We agreed that prompt action is needed to reverse the unfunded subsidies which have slowed discussions for the 7th review,” the IMF said in a statement after discussions with the visiting Pakistani finance minister in Washington.
Pakistan has given over US$2 billion (S$2.8 billion) of subsidies to the oil and power sectors.
Pakistan earlier requested the IMF extend its loan programme for a year and enhance a US$6 billion funding to ease financing difficulties for the south Asian country as a new government stepped in this month.
Miftah Ismail, the nation's finance minister, said the requests were made during "positive" talks with the fund in Washington for the resumption of the loan programme.
The IMF has "largely agreed" to extend the current programme for another year but details would be thrashed out during a mission visit to Pakistan next month, he said at a news conference in Washington.
The IMF suspended its loan to Pakistan after political turmoil that led to the ouster of Imran Khan. Aid from the lender will be critical to bolster the country's finances, after foreign exchange reserves fell to less than two months of import cover.