IMF asked once again to revise FBR revenue target

ISLAMABAD: Pakistani authorities have shared data of import compression with the IMF and requested to revise downward FBR’s annual tax collection target keeping in view reduction in overall imports, The News has learnt.

The Federal Board of Revenue (FBR) asks downward revision in its target from Rs5.238 trillion to Rs4.8 trillion in the wake of massive decline in imports to the tune of around $5.5 billion in first seven months of the current fiscal year.

“Pakistan and the IMF team held tele-conference twice last week but so far both sides could not narrow down differences” official sources said while talking to The News here on Monday. For striking staff level agreement, both sides were expected to hold more deliberations in next couple of weeks. The IMF insists that the FBR must achieve its once revised target from Rs5.5 trillion to Rs5.238 trillion to ensure effective fiscal management of the country.

Pakistan and IMF high-ups conducted tele-conference twice last week and the FBR side shared complete import data on HS Code basis in order demonstrate that imports declined massively including raw material, machinery and intermediary goods. The overall compression of imports stood in the range of $5.5 billion so such level of declined imports should be calculated to revise downward the tax collection target for the current fiscal year. “The IMF has not yet shared its FBR collection number” said the official sources but it is the wish of the FBR that its target should be revised downward from Rs5.238 trillion to maximum Rs4.8 trillion”, said the official. Another stumbling block in the way for evolving consensus on prescription of IMF is related to hiking tariff of energy utilities especially electricity and gas. The PTI led regime has finalised its strategy to freeze power tariff till June 2020. On gas tariff, the controversy lingers over inclusion of arrears of RLNG as it is not yet decided whether the subsidy amount of past arrears to the tune of Rs19 billion and if take into account existing and upcoming it goes up to Rs50 billion will be charged from consumers or it will be absorbed by the government through subsidy.

For striking staff level agreement, both sides still possessed timeframe for narrowing down differences of about more than two weeks period because the IMF staff required 4 to 6 weeks period for preparation of report and circulating before the Executive Board members for getting approval of second review and release of third tranche worth $452 million. The timely rollover of Chinese loan is another stumbling block in the way for evolving staff level agreement.

Now the Spring Meetings of Breton Wood Institutions (WBIs) such as the IMF and World Bank is scheduled to take place in Washington DC from April 13 to 19, 2020. It will give opportunity to Pakistan’s Adviser to PM on Finance Dr Abdul Hafeez Shaikh and Governor SBP Dr Reza Baqir to break ice if both sides remained unable to sort out differences over next 6 to 7 weeks period. If it happened then there would be no other solution but to club second and third reviews under $6 billion Extended Fund Facility of the IMF programme, making it even harder for Pakistani authorities to fulfil the commitment made with the IMF. So the best available choice is to find out middle ground for striking staff level agreement maximum by second week of March 2020.

The Spring Meetings of the Boards of Governors of the International Monetary Fund (IMF) and the World Bank Group (WBG) bring together central bankers, ministers of finance and development, parliamentarians, private sector executives, representatives from civil society organisations and academics to discuss issues of global concern, including the world economic outlook, poverty eradication, economic development, and aid effectiveness.

Also featured are seminars, regional briefings, press conferences, and many other events focused on the global economy, international development, and the world's financial system. This year's events will take place in Washington, DC, April 13-19, 2020.