Three-year programme: IMF asks Centre, provinces to generate surplus revenue

ISLAMABAD: Sindh Chief Minister Syed Murad Ali Shah on Saturday said Sindh had a higher tax collection rate and the federal government would have to improve its tax collecting system.

Speaking to reporters after attending a meeting of provincial ministers with the IMF Mission led by Ernesto Ramirez Rigo here on Saturday, he said the provincial governments had informed the IMF that they had a better tax collection record.

"We have to work on overcoming shortcomings of our economy, only then will we be able to make things better," he added.

He said talks with Ramirez Rigo remained positive and matters should be decided as soon as possible so that things would move ahead. Earlier, Adviser to the Prime Minister on Finance Dr Abdul Hafeez Shaikh along with Sindh chief minister and finance ministers of Punjab, Khyber Pakhtunkhwa and Balochistan met the IMF Mission led by Ernesto Ramirez Rigo here on Saturday.

The IMF delegation, which arrived in Islamabad earlier this week, is finalising talks on a bailout package and is expected to conclude the technical details of the proposed loan by Monday.

The proposed bailout package is expected to be between $7 billion and $8 billion.

During the meeting, the participants exchanged views on the county's existing fiscal situation in the context of IMF programme, which is currently under discussion, the finance ministry said in a press release.

The IMF Mission was apprised that the federal and provincial governments were constantly engaged on fiscal matters and the National Finance Commission (NFC) and the Fiscal Coordination Committee (FCC) forums were being used for ensuring maximum cooperation and coordination among the federal and provincial fiscal authorities.

According to the finance ministry, the provincial finance ministers apprised the IMF team of various initiatives taken in their respective provinces for resource mobilisation at the sub-national level to cater for the increasing developmental and social spending needs.

They said revenue from taxation had witnessed a marked improvement recently. They also said they were managing their expenditures prudently for better fiscal outcomes.

According to the press release, the IMF team was assured that the provincial governments would support and complement the efforts of federal government to adhere to the fiscal framework being discussed with the Fund.

The IMF asked the provinces to generate surplus revenue for curtailing budget deficit to the desired limits under the three-year Fund program.

However, it was left to the Center and provinces to devise their budgets, as the Fund had been told that the National Finance Commission (NFC) was a constitutional arrangement that could not be altered at the wish of a donor agency.

The IMF Mission was encouraged by the shared thinking at the federal and provincial levels, while the IMF leader appreciated the updates provided by the provincial governments.

He highlighted the importance of a harmonised system of taxation that would contribute towards increasing economic activities and business growth in the country.

Senior officials of the Finance Division as well as provincial finance departments also attended the meeting.

Speaking to reporters after the meeting, Dr Abdul Hafeez Shaikh said the provincial finance ministers had given their recommendations in the meeting with the IMF mission.

He said the economic statistics were presented to the IMF team while the topic of increasing tax revenue was also discussed in the meeting.