ISLAMABAD: The IMF team has expressed dissatisfaction with the Ministry of Finance’s assertion that all structural benchmarks, quantitative targets, and indicative targets were met even before the completion of the review process by the Fund staff.
Nathan Porter, the IMF Mission Chief, along with other team members, voiced their displeasure at the premature announcement by the finance ministry, stating that the review process under the $3 billion Standby Arrangement (SBA) program had just commenced, and any recommendations would be formulated after analyzing official economic sector data.
Previously, the finance ministry had officially declared achievement of all benchmarks and targets without awaiting feedback from the IMF. Despite attempts to obtain comments from the ministry spokesperson, there was no response.
During the initial review talks, the IMF team extensively questioned the finance ministry team, leaving them uncertain about how to respond. Finance Minister Aurangzeb acknowledged the issue, asserting that such incidents would be avoided in the future.
Pakistan and the IMF initiated discussions for the completion of the second review and reaching an agreement on the Memorandum of Economic and Financial Policies (MEFP). The disbursement of the final tranche of $1.1 billion is expected to be presented to the Fund’s Executive Board in the second week of April 2024. There is a possibility of a mini-budget, with the IMF potentially recommending tax rate increases, particularly in General Sales Tax (GST), to boost revenues, should the Federal Board of Revenue (FBR) fall short of its March 2024 tax collection target of Rs879 billion.
The IMF also inquired about the feasibility of achieving the quarterly target for April-June to meet the annual tax collection goal of Rs9,415 billion. Discussions with FBR officials regarding a simplified tax scheme for retailers and the government’s commitment to it remained inconclusive.
Additionally, the IMF engaged in crucial discussions with energy sector officials, urging them to devise a plan to curtail circular debt accumulation. The Ministry of Energy disclosed plans to end gas subsidies for fertilizer plants while seeking guidance on reducing fertilizer costs for farmers.
In an official announcement made by the finance ministry, it was disclosed that an IMF mission had met with Federal Minister for Finance and Revenue Muhammad Aurangzeb to conduct the Second Review of the Standby Arrangement (SBA). The minister reaffirmed the government’s dedication to collaborating with the IMF on Pakistan’s economic growth and stability agenda.
(Islamabad51_Newsdesk)
