Wednesday May 29, 2024

IMF slams ministry declaration all targets have been achieved

"This would be final review of SBA, and staff level agreement is expected after this appraisal," says finance ministry

By Mehtab Haider
March 15, 2024
The International Monetary Funds (IMF) building in Washington, United States. — AFP/File
The International Monetary Fund's (IMF) building in Washington, United States. — AFP/File

ISLAMABAD: The IMF team has expressed its displeasure over the Ministry of Finance verdict that it had materialised all structural benchmarks, quantitative and indicative targets even prior to scrutinising and completion of the review by the Fund staff.

IMF Mission Chief Nathan Porter and his other colleagues expressed their displeasure that the finance ministry had announced its verdict before the completion of the review process under $3 billion Standby Arrangement (SBA) programme, which they had just started and would come up with their prescriptions only after analyzing the official data of various sectors of the national economy.

Earlier, the finance ministry announced in its official handout that they had met all structural benchmarks and other targets before getting any feedback from the IMF.

Questions for this news report were sent to the ministry spokesperson but they remained unanswered.

The IMF review mission literally grilled the finance ministry team in the maiden session of the review talks and everyone seemed clueless how to respond. However, Finance Minister Aurangzeb took the stance that he had taken note of it and such episode would never be repeated in future.

Pakistan and the IMF kick-started parleys for the completion of the second review and striking an agreement on Memorandum of Economic and Financial Policies (MEFP) after which the release of last tranche of $1.1 billion will be presented before the Fund’s Executive Board in the second week of April 2024. “The possibility of any mini budget cannot be ruled out at the moment, so the IMF may come up with prescriptions of raising rates of different taxes, especially General Sales Tax (GST) in order to fetch additional revenues on instant basis. It will only become affirmative if the FBR faces any shortfall in achieving the tax collection target of Rs879 billion for March 2024,” top official sources confirmed while talking to The News on Thursday.

The IMF team also asked about the possibility of achieving the target for the last quarter (April-June) so as to meet the desired annual tax collection target of Rs9,415 billion. The IMF team inquired about the exact timeframe for unveiling the simplified tax scheme for retailers and political will of the incumbent regime in this regard. The FBR high-ups were not able to reply.

The IMF also held crucial talks with energy sector high-ups and asked them to come up with a plan to restrict the circular debt for avoiding any further accumulation. The Ministry of Energy high-ups said that they were withdrawing gas subsidy for fertiliser plants and wanted direction on cheaper fertiliser bags for farmers in order to reduce the input of farm sector. According to an official announcement made by the finance ministry on Thursday, an IMF mission called on Federal Minister for Finance and Revenue Muhammad Aurangzeb at the Ministry of Finance. The IMF mission is in Pakistan to conduct the Second Review of the Stand-by Arrangement (SBA). The finance minister welcomed the mission and expressed the government’s commitment towards working with the IMF on the reform agenda for economic growth and stability of Pakistan. IMF Mission Head Nathan Porter congratulated Finance Minister Muhammad Aurangzeb on his appointment. Discussions were held on the overall macroeconomic indicators, government’s efforts on fiscal consolidation, structural reforms, energy sector viability and SOE governance. The minister thanked the IMF for its continued support and hoped for productive meetings during the second review.