ISLAMABAD: Pakistan's Prime Minister Shehbaz Sharif has approved a deal with the International Monetary Fund (IMF) and all mattters over the bailout program are settled, local broadcaster Geo said on Thursday, citing sources.

Cash-strapped Pakistan had been due to wrap up talks on Thursday with the IMF in a bid to unlock stalled funds from a $6.5 billion bailout to ward off economic meltdown.

The South Asian nation was earlier hopeful to reach a consensus on pending issues with the IMF in talks that are in its final stage, finance minister Ishaq Dar told reporters in Islamabad.  

“Detailed and vigorous discussions have been held in the past 10 days and I hope talks will be concluded successfully,” Dar said. “We will be able to revive this program. There is no deadlock.”

The rupee advanced 1 per cent to 270.51 per dollar, while the benchmark stock index rose 1.8 per cent at close, up a fourth day. Its dollar bonds also gained with notes due in 2024 indicated 4.5 cents higher, to trade at 59.6 cents on the dollar, the biggest jump in about two month.

“The IMF repeatedly asked for a solid plan for whatever relief government wants to give and issues to solve so they report accordingly,” Dar said, signalling that the Fund is open to reaching a consensus. No change would be made in the base tariff on electricity, he said.

Pakistan has a tumultuous track record with the IMF. Most of its previous bailouts “- 13 since the late 1980s “- weren’t completed.

Asking for much more

The government secured a $1.1 billion loan in August, part of a $6.5 billion package agreed upon in 2019. But it has been halted multiple times because of Islamabad’s failure to meet loan conditions and disagreements over spending plans after the floods.

“The IMF is clearly asking for much more than what the government is willing to do, even with a little bit of arm twisting,” said economic analyst Abid Hasan, a former adviser to the World Bank, in the capital Islamabad.

“Both sides are waiting for the other to blink.”

The IMF wants a boost to the pitifully low tax base, an end to tax exemptions for the export sector, and further hikes to artificially low petrol, electricity and gas prices meant to help low-income families.

It is also pushing for Pakistan to keep a sustainable amount of US dollars in the bank through guarantees of further support from friendly nations Saudi Arabia, China and the UAE, as well as the World Bank.

“There is no deadlock,” Pakistan Energy Minister Khurram Dastgir Khan told local media on Wednesday. ”Detailed and vigorous discussions have been held in the past 10 days.”

“I have full hope that these talks will be concluded successfully.”

A government official, who asked not be named, told AFP that the “IMF is not satisfied with the current prices of petroleum and energy”.

Fears of a further price hike have seen hoarding in the country’s largest province of Punjab, pushing the state minister Musadik Malik to report that the government had “no plans to increase the fuel price”.

Meanwhile, struggling industries are battling for the government to unblock imports, with thousands of shipping containers held up at Karachi port.

The steel industry has warned the government that unless scrap metal imports are restarted, there will be a cascading effect on employment.