IMF team extends stay for a day as consensus eludes talks with govt

ISLAMABAD: Pakistan and the IMF have so far remained unable to evolve consensus on staff level agreement for completion of second review and release of third tranche worth $1.1 billion so the Fund review mission has extended its stay in Islamabad for one more day.

The IMF wants top level assurances including Prime Minister Shehbaz Sharif before striking a staff level agreement on certain contentious issues including raising electricity and gas tariff from July 1, 2024 as well as raising quarterly tariff adjustment and making adjustments under fuel price adjustments. The provinces have agreed to generate revenue surplus of Rs600 billion but so far it remained one of the problematic areas so there might be adjustments in order to strike consensus on finalising of the MEFP.

There is another issue that the IMF wants announcement of retailers’ scheme but FBR is making efforts to convince them to launch this scheme from the next budget arguing that it would require efforts but would have no positive impact on revenue collection. It is yet to see how the IMF adjusted retailers’ scheme in the staff level agreement which will pave the release of third and last tranche of $1.1 billion under $3 billion SBA programme.

The IMF has re-adjusted monthly revenue collection targets with the hope that the FBR will materialise its desired tax collection target of Rs9,415 billion on June 30, 2024.

Pakistan might also inform the IMF’s visiting mission about its intention for securing another long- term bailout package under Extended Fund Facility (EFF) program. It will be just verbal intention and then Islamabad is likely to table formal application before the IMF on the occasion of Annual Spring Meetings of IMF/World Bank scheduled to be held from April 15 to 20. Minister for Finance will lead Pakistani delegation and official entourage will be participating in the upcoming spring meeting from April 17 to 20, 2024.

“There is no scheduled meeting with relevant ministries and departments on Tuesday but the draft Memorandum of Financial and Economic Policies (MEFP) will be discussed with Ministry of Finance and finalised for striking a staff level agreement on Tuesday (today),” top official sources confirmed while talking to The News here on Monday. The timeframe does not allow both sides to linger on talks for striking a staff level agreement because the existing Standby Arrangement (SBA) will expire on April 12, 2024.

On FBR’s monthly tax collection target, the FBR would have to collect Rs879 billion in March 2024 while in the last quarter (April-June) the FBR requires collection of Rs2,707 billion in order to achieve the desired revenue target of Rs9,415 billion on June 30, 2024.

The FBR so far fetched Rs5,829 billion in first eight months (July-Feb) period of the current fiscal year. On the directives of PM, the FBR issued more refunds so it will be really challenging to materialise the revenue collection target for June 2024 that might be quite huge for displaying the desired figure of Rs9,415 billion.

This scribe sent out question to Ministry of Finance regarding extension in the stay of the IMF review mission on Monday night but got no reply till the filing of this report.