No firm schedule by IMF for finishing 9th review

ISLAMABAD: Without committing any firm schedule for the completion of the pending 9th review, the International Monetary Fund (IMF) on Monday stated that the fund would continue engagement with Pakistani authorities for providing relief to flood-affected people while ensuring sustainable policies.

IMF Resident Chief in Pakistan Esther Perez Ruiz stated in a brief statement on Monday that “the IMF remains engaged with the authorities under the current programme (Extended Fund Facility) to support their endeavours to provide relief to the vulnerable affected by floods, advance reconstruction efforts while ensuring sustainable policies”. When this scribe inquired further about the exact schedule for the completion of the pending 9th review under the EFF arrangement for Pakistan, the IMF resident chief preferred not to reply.

However, a Pakistani official said that for the time being, the online exchanges between the two sides continued. It clearly indicates that the IMF so far seems reluctant to finalize any firm schedule for holding parleys for the completion of the 9th review and release of next tranche to the tune of around $1 billion.

Amid increasing political temperatures, the IMF has been using dillydallying tactics by adopting the approach of “wait and see” for ascertaining the situation on the ground before dispatching its mission and concluding review talks with Pakistani authorities. The IMF has so far expressed its concerns over fiscal framework and raised questions about missing of tax and non-tax collection targets as well as exceeding expenditure heads so the budget deficit and primary deficit are projected to be beached with margins. Some kind of revision in fiscal framework in shape of exploring possibility of presenting a mini-budget is still under discussion while Pakistani authorities argued that they would be able to materialize both tax and non-tax collection targets in the current fiscal year.

The IMF does not seem agreed to this assertion that the government will be able to materialize its envisaged target on account of the Petroleum Development Levy (PDL) as so far the government could fetch Rs 47 billion in the first quarter (July-Sept) period against the desired target of Rs 855 billion for the whole financial year. With existing pace, the government could maximum collect Rs 200 billion and by jacking up the PDL, it could go up to Rs 300 billion to Rs 350 billion. At any cost, there is a possibility of shortfall in the range of Rs 500 billion. On the other hand, the Ministry of Finance informed the IMF that they re-calculated the non-tax revenue target and the SBP profit could fetch an additional funding by Rs 71 billion as now the government was eyeing to collect Rs 371 billion against the earlier envisaged target of Rs 300 billion through SBP profits.

The IMF conveyed to the government that the FBR would also miss its desired target of Rs 7,470 billion, so the government would have to take additional measures to jack up tax to the GDP ratio in the current fiscal year. The IMF expressed concerns over an agriculture package and energy subsidy announced for five export-oriented industries for the current fiscal year and termed it unsustainable for the struggling economy of Pakistan.