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March 17, 2020

Major relief from IMF: Coronavirus expenses not to be part of budget deficit

Top Story

March 17, 2020

ISLAMABAD: Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh on Monday said the IMF had agreed to not include the expenditures incurred on combating coronavirus as part of budget deficit for the current fiscal year 2019-20.

Talking to reporters outside the Q-Block (Finance Ministry) at the Pak Secretariat, Dr Shaikh said Pakistan was able to get a major relief from the IMF, as expenditures incurred on controlling coronavirus would not be part of the current fiscal year budget deficit. The IMF had allowed Pakistan to curtail the budget deficit at 7.5 percent of GDP for the current fiscal year at a time when the FBR is facing a major revenue shortfall in the current fiscal year.

The target was revised downward from Rs5.555 trillion to Rs5.238 trillion and now the government has requested the IMF to further revise it down to Rs4.8 trillion for the current fiscal year. Keeping in view the halting economic activities, the possibility of more revenue shortfall is expected. The FBR high-ups predict that the overall collection might stand at Rs4,450 to Rs4,500 billion on June 30, 2020. In order to compensatethe losses, the finance ministry has presented an alternative plan to the IMF where reliance on non- tax revenue would be increased. The petroleum levy will continue to increase in months ahead.

However, Dr Abdul Hafeez Shaikh said Prime Minister Imran Khan has asked him to assess the negative impact caused by coronavirus on the economy. “We will make all out efforts to devise such strategy where the economic activities do not affect negatively,” he maintained. He said the government would make all-out efforts to avoid shortages of essential food items and price hike in the domestic market. The government, he said, would make efforts to ensure that the farmers would continue getting due prices of their produce crops.

Efforts will be made where there is no risk of increased unemployment in the wake of possibilities of shutdown of economic activities, he added. He said in case of disruption in the smooth supply of exports, the exporters would be asked to get more timeframe for ensuring delivery of goods. He said the stock market had tumbled by 10 to 11 percent, while the world markets crashed causing $1 trillion losses. He said Pakistan could also get advice from those countries that had overcome the virus.

Meanwhile, the International Monetary Fund (IMF) has canceled its technical missions’ scheduled visit to Pakistan in the wake of coronavirus outbreak. One such mission was scheduled to visit the Federal Bureau of Revenue this month. The FBR high-ups fear that if the crisis persisted for a longer period, economic activities would halt, leading to higher revenue losses. “If the coronavirus prolonged for few months then the FBR’s revenue collection would further face revenue loss of Rs100 billion on a monthly basis in the remaining four months (March to June) of the current fiscal year.

Now it has been decided that the IMF’s technical missions, which were scheduled to visit Pakistan during the ongoing month, would now interact with the Pakistani authorities through email and video conferencing where it’s necessary.

On issues related to routine things, the IMF decided to postpone such meetings for time being and the Fund’s Headquarters would take decision to this effect after reviewing the situation in different countries.

A top government official disclosed to The News that the Technical Mission had canceled its scheduled mission’s visit to the FBR for finalizing tax reforms. “Different technical missions, which are in the pipeline, have been canceled due to outbreak of coronavirus” said the official. The IMF has given health warning to its staff and tasked them with discharging their assigned work from home keeping in view the quarantine requirements. On the other hand, the FBR has also decided to curtail its activities.

Acting Chairperson FBR Nausheen Javid Amjad cancelled meetings including the visit of a delegation of tax officials from Lahore. Nausheen would continue to attend meetings with Prime Minister Imran Khan and Adviser to the Prime Minister on Finance and Revenue Dr. Abdul Hafeez Shaikh. The FBR has also taken precautionary measures including the use of masks by the visitors during movement in the FBR House. Use of biometrics by the FBR employees at the entry of the building has already been suspended. The FBR employees are also avoiding frequent interaction with the outsiders.