ISLAMABAD, June 18: The World Bank and the International Monetary Fund have put no pressure and have set no deadline for the government to withdraw subsidies on oil, gas and electricity, finance ministry sources told Dawn on Wednesday.

Asked for comments on reports that Dec 30 was the deadline, the sources said the two donors rather agree with the government approach of “gradually phasing out” subsidies to avoid social consequences of an abrupt termination.

There was a complete understanding with the bank and the fund officials on the issue of subsidies, and “it is incorrect to say that there is any pressure or any deadline has been given to us,” said Finance Secretary Farruk Qayyum.

Pakistan has made it clear on both the donors that the elected government needed some time to completely do away with the existing subsidies.

The World Bank and IMF officials were informed that the government was liquidating its outstanding dues by consulting all stakeholders to gradually remove subsidies.

Sources said that the government planned to bring down fiscal deficit from seven to 4.7 per cent of the GDP during the next financial year which was not possible without cutting unnecessary expenditures and gradually phasing out subsidies.

They said that the process of gradual withdrawal of subsidies had started by cutting down them from Rs407.48 billion to Rs295.20 billion in 2008-09.

However, they conceded that there was an intolerable burden of subsidies in the current budget.

Sources said that the government agreed with the donors that subsidies were causing distortions in economy, therefore, these needed to be abolished. The issue was also causing problems for government’s internal credit rating by international credit rating agencies.

The government assured the donors that “policy measures” were being taken to “pass through” the impact of oil prices and other increases to the people.

“The budget cannot sustain these subsidies on a regular basis and time has come to deal with the issue with all the seriousness,” said a source.

Sources said that price differential claims of the oil marketing companies and refineries were being cleared and as more cheques worth Rs20 million would be issued to them within next this week.

While Pakistan was no more seeking any funding from the IMF, and it hoped to receive World Bank’s $1.5 billion annual assistance that had not been linked with withdrawal of subsidies, sources said.