ISLAMABAD - Talks between Pakistan and the International Monetary Fund (IMF) for new loan programme would likely to conclude today (Sunday) in Islamabad after both sides failed to make a breakthrough on Saturday.

Negotiations between two sides had started on April 29 in Islamabad for new loan programme. The government and the IMF were supposed to announce a staff-level agreement yesterday (Friday). However, talks were extended for another two days to make a breakthrough after both sides failed to evolve consensus on loan deal. Talks ended inclusively on Friday mainly due to differences on increasing taxes to control budget deficit in upcoming budget.

Sources said that talks continued on Saturday. However, no major breakthrough was achieved during the talks. The round will likely to end today (Sunday).

Prime Minister Imran Khan has reportedly turned down the draft of a staff-level agreement between government and IMF. Khan is unhappy with the revenue generation measures directed by the IMF. Prime Minister believes that heavy taxation would increase inflation, which was already on the higher side.

Pakistan has accepted all IMF conditions except imposing taxes worth Rs700 billion in budget for next fiscal year. The IMF is asking Pakistan to impose massive taxes equivalent to 1.7 percent of the GDP (Rs700 billion) to control increasing budget deficit. However, the government believes that massive taxation will increase inflation rate. The government has assured the Fund that it will impose taxes worth Rs500 billion while rest of the amount can be collected through enforcement measures. However, the proposal was turned down by the IMF.

Pakistan has assured the Fund for increasing power and gas prices in next few years in different phases. Similarly, it has also given assurance for privatisation of loss-making public sector entities. The government has also assured the IMF that it would not interfere in the matters of OGRA and NEPRA in fixing gas and electricity prices, respectively. This was one of the main demands of the IMF, according to sources. Meanwhile, Islamabad has also given assurance to the IMF that it would not interfere in market to control the value of currency as it did in the past.