ISLAMABAD: IMF has imposed 3 new conditions for the new loan program while demanding the termination of the provision of subsidy by 30 September to provide Rs 14 per unit relief on electricity bills by the Punjab government.
Due to these conditions, the Punjab government’s Rs 700 billion plan to provide solar panels to consumers in installments may also be in jeopardy.
After the Punjab government announced a subsidy of Rs 14 per unit on electricity bills for 2 months, the IMF has imposed these new strict conditions on the provinces, under which no provincial government will be able to provide a 7 billion dollar loan program of 37 months. The government will not be able to provide any such subsidy.
According to the conditions, the provinces have agreed not to give any subsidy on electricity and gas. This refutes claims that provinces can subsidize electricity and also questions Prime Minister Shehbaz Sharif’s statement in which he encouraged the other three provinces to follow Punjab’s lead.
According to sources, the second new condition of the IMF binds all provincial governments to the fact that they will not introduce any policy or measure that is against or undermines the commitments made under the 7 billion dollar program. This provision will cut the wings of the four provincial governments regarding powers in financial matters.
Provincial governments have pledged with the IMF to sign a National Fiscal Agreement by the end of September so that they can shoulder some of the costs borne by the federal government. Provincial governments have also promised to improve agricultural income tax, property tax and sales tax on services.
Due to the new condition of not undermining these promises, provincial governments can no longer take unilateral actions. According to the third new condition of the IMF, the provinces will consult the Ministry of Finance before taking any action that may affect or reduce the structural standards and key measures agreed with the IMF.
Unlike in the past when there was less focus on provincial policies and budgets, the new IMF program covers five budgets and policies of five governments. The Finance Ministry is trying to get a date for the IMF Executive Board meeting to approve the $7 billion loan program.
This week is being considered very important in terms of approval of new loans and rollovers. Sources said that the IMF is critically reviewing the budgets of the provinces and has observed that Punjab and Sindh’s revenue estimates are too high due to which they are facing difficulties in meeting the cash surplus generation targets. May have to.
