Finance ministry gets ready for talks with IMF

ISLAMABAD: The Ministry of Finance has made preparations for holding crucial talks with the International Monetary Fund (IMF) review mission probably from next week, and a formal invitation will be sent to the Washington-based lender soon after the formation and oath-taking of the federal cabinet.

Top official sources confirmed to The News on Tuesday that the IMF was also waiting to receive a formal invitation from Islamabad. It was expected that soon after the formation of the cabinet, the IMF team would arrive in Islamabad to kick-start talks for the completion of the second review under the $3 billion Standby Arrangement (SBA) programme.

Pakistan would also simultaneously request a fresh deal under 36-month Extended Fund Facility (EFF). “The size of the next EFF programme has not yet been discussed and finalised but Islamabad will look into the possibility of augmenting EFF with climate finance to maximise the size of the programme from $6 billion to $8 billion,” official sources said.

The first and foremost challenge for the upcoming minister for finance would be making all-out efforts to achieve the FBR’s tax collection target of Rs890 billion for March 2024 by materialising the agreed quarterly (Jan-March) target with the IMF. “If there is any shortfall in March 2024, then the IMF may come up with additional taxation measures for the remaining period of current fiscal year,” said the official.

Keeping in view the challenging task, newly elected Prime Minister Shehbaz Sharif chaired a high-level meeting here at the PM Office on Tuesday to get an extensive briefing from the FBR team on the future roadmap for overhauling the taxation system.

The FBR has so far collected Rs5.82 trillion in the first eight months of the current fiscal year but it has witnessed a revenue shortfall of Rs33 billion in achieving the monthly target of February 2024. The FBR requires revenue collection of Rs3.58 trillion in the remaining four months (March-June) period to show the desired target of Rs9.415 trillion on June 30, 2024. In March 2024, the monthly target of Rs890 billion will have to be materialized to achieve the third quarter (Jan-March) period agreed with the IMF. The IMF has already listed eight contingent measures to be undertaken by the FBR to fill the revenue gap if the shortfall occurs in achieving the monthly target.

Earlier, chairing the meeting, Prime Minister Shehbaz Sharif directed for immediate start of automation and digitisation of the FBR saying that he would personally monitor the whole process. He asked for following the best models for automation and digitisation to bring transparency in FBR working to increase tax collection and receipts and to eliminate tax theft, corruption and smuggling.

The meeting was also attended by FBR Chairman Malik Amjad Tiwana who briefed the prime minister on the measures taken towards automation, widening of tax net, payment of refunds to exporters and stopping smuggling and tax theft. Shehbaz, however, was not satisfied with the briefing and maintained that the automation and digitisation process should begin immediately as per the world’s best models. “You should acquire the services of international firms,” Shehbaz told Tiwana. He said that honest and competent officers of FBR would be appreciated and rewarded. He also directed for appointment of officers on merit in the Track and Trace system.

Shehbaz said the Ministry of Interior would work effectively with the support of Pakistan Army to eliminate smuggling. He maintained there was a need to move forward while learning lessons from the past. “We will have to accept the challenge of stopping loans and this can be achieved with the participation of competent people,” he said.

The prime minister maintained the country would achieve progress and prosperity if the government and the nation started the journey with hard work in the right direction. He also lauded the services of caretaker finance minister Dr Shamshad Akhtar, secretary of finance and her team saying that they moved ahead with the policy laid by his previous government, showing good progress to avert the default. Addressing Dr. Shamshad Akhtar, the PM said that he was impressed with her merit policy.

The FBR chairman informed Shehbaz that the board was working on getting 1.5 million more people into the tax net. The prime minister directed for immediate implementation of digitalised invoicing on which legislation had already been done. Attaullah Tarar, Dr Musaddik Malik, Rumina Khurshid Alam, Rana Mashood Ahmad, Ahad Cheema, Planning Commission Deputy Chairman Dr Jahanzeb, Dr Shamshad Akhtar, FBR chairman and State Bank of Pakistan governor also attended the meeting.