Pakistan authorities did not consult with the International Monetary Fund (IMF) staff ahead of announcing their recent fuel subsidy proposal, the lender's resident representative said. "The IMF is seeking greater details on the scheme in terms of its operation, cost, targeting, protections against fraud and abuse, and offsetting measures, and will carefully discuss these elements with the authorities," Esther Perez Ruiz told, says in media reports.

The IMF's statement comes after Prime Minister Shehbaz Sharif announced on Sunday that the low-income segment of the country will be given a fuel subsidy of Rs50 per litre as part of a new relief package. Unfunded and untargeted subsidies are frowned upon by the IMF that instead advocates scaling up social protection for the most vulnerable.

In a press conference the next day, Minister of State for Petroleum Musadik Malik said the premier has in fact "ordered the difference between fuel prices paid by the affluent and poor income segments to be Rs100”, elaborating that the mechanism would be a cross subsidy that would be generated by raising fuel prices for the rich segment. "As a general matter, the IMF sees strengthening support for those eligible for social assistance through the unconditional Kafalat cash transfer scheme as the most direct way to help the neediest in Pakistan," said Ruiz.

The development potentially means the staff-level agreement could still take some time as authorities remain engaged in talks with the IMF. The government has time and again expressed hope its bailout programme that has remained stalled at the ninth review since November last year would be revived soon.

Credit : Independent News Pakistan-INP