Dar eying IMF waiver due to deficit

ISLAMABAD: Minister for Finance Ishaq Dar said that Pakistan would have to seek waiver on budget deficit target in ongoing review talks with the IMF as provinces could not throw promised revenue surplus in the wake of flawed mechanism.
“The federal government has achieved its desired deficit by ensuring strict financial discipline despite spending billions of rupees on Zarb-e-Azb that ballooned expenditure side but overall deficit of the country exceeded from 0.25 to 0.26 percent of GDP because of provinces against desired target of 5 percent of GDP, leaving no other option but to seek a waiver from the IMF,” Dar told The News in an exclusive telephonic chat here on Wednesday evening.
The minister said that it was explainable that there is no fault on the part of the federal government as provinces could not deliver on throwing promised revenue surplus.“But we cannot force the provinces as this flawed mechanism is in place to set the budget deficit target,” he added.
He said the federal government curtailed its deficit portion by placing strict financial discipline despite this fact that expenditure was increased because of Zarb-e-Azb and IDPs and both taxable and non-taxable revenues also decreased.
“We placed strict monitoring during last month in order to achieve the desired results,” he added.In the budget 2014-15, it was envisaged by the Center that the provinces would achieve a revenue surplus of Rs289 billion but it stood at around Rs200 billion causing budget deficit.
Asked how the federal government successfully delivered despite shortfall in both tax and non-tax revenues, he said that he had monitored the financial situation during last month by placing strict disciplines.
The government had envisaged to achieve budget deficit target of five percent of GDP for fiscal year 2014-15 that ended on June 30, 2015. After failure of provinces to throw desired revenue surplus, the budget deficit might exceed from 5.2 to 5.3 percent of GDP for end June 2015 which will come under review during the ongoing talks between Pakistan and the IMF team in Dubai starting from July 29 to August 6.
To another query regarding option of six-month review under $6.64 billion Extended Fund Facility (EFF) instead of three-month review by the Fund team, the minister said that this option would be considered during the review talks if IMF provided desired cash flows by merging certain portion of funds along with new arrangements.
Pakistan, he said, performed well under the existing IMF programme, which was recognised internationally by all donors at all levels. “The option of going ahead with six-month review exists on the table provided the IMF resolves the issue of cash flows by adjusting funds along with ninth and eleventh reviews under $6.64 billion EFF programme”, he concluded.