IMF director for national economic consensus for reforms

ISLAMABAD: The International Monetary Fund’s (IMF) visiting Director Masood Ahmed has said that Pakistan requires a national economic consensus among all the political parties for moving towards the desired structural reforms even without getting a fresh bailout package from the IMF.

Outlining four major areas of economy requiring structural reforms, he said that Pakistan would have to stick to the path of reforms beyond the IMF programme that included expanding the narrowed tax base for generating more revenues to meet the pressing needs of public investment, tackling loss making public sector enterprises including PIA, PSM and power companies, completing the ongoing energy reforms and improving the deteriorated business climate.

“The desired structural reforms need to be continued beyond the IMF sponsored programme. The national consensus is the main issue which will aim to transform and modernise the country’s economy. It requires a consensus on national economic agenda for moving towards the desired objectives,” the visiting IMF’s Director for Middle East and Central Asia Department Masood Ahmed told journalists on Friday in a press conference after holding a meeting with PM Nawaz Sharif, Finance Minister Ishaq Dar and Punjab Chief Minister Shahbaz Sharif during his visit to Pakistan in the last couple of days.

Flanked by IMF’s mission chief Harald Finger and IMF’s Resident Chief Tokhir Mirzoev during the briefing to select journalists, the question on Panama Leaks was raised before him by asking the Fund to take up this issue with Pakistan authorities, Masood said that they did not raise this issue with Pakistani authorities as different countries were tackling tax evasion issues in accordance with their law of land.

The main issue confronted by Pakistan’s economy on fiscal side is the pressing need to broaden the tax base as the direct taxpayers are quite low as compared to the population of the country, he argued.

When asked about a fresh IMF programme after the expiry of existing Extended Fund Facility (EFF) by coming September 2016, he said that the IMF would continue to provide technical assistance and advice to Pakistan even without entering into a new financing programme.

To another question regarding the poor performance of the export sector, he said that strengthening of the export base was highly important both for boosting the foreign currency reserves and keeping the balance of payment stable but it also helped to improve the technology and economic activities in the country.

Looking ahead, he said that there was a need to check the position of exports which were negatively impacted because of energy constraints, competitiveness and exchange rate problems in the context of real effective exchange rate. When asked to comment on the failed Voluntary Tax Compliance Scheme (VTCS) for traders, the fund’s director said that the IMF supported the move but now it would be up to the Pakistan authorities to use incentives or disincentives in the shape of increasing cost for financial transaction through banks for non-filers.

Under the existing IMF programme of $6.46 billion, he said that Pakistan made quite a significant progress on the economic front during the last three years as the macroeconomic indicators had improved and the country achieved comfortable position. Now there is a need to strengthen the achieved gains with advances in such a way that do not derail the desired reform path.