Sixth Review postponed after Pak request: IMF

ISLAMABAD: The Executive Board of International Monetary Fund (IMF) has postponed consideration of completion of the Sixth Review and release of $1 billion tranche under the Extended Fund Facility (EFF) on January 12, 2022, after receiving a request from the Pakistani authorities.

An interesting phase is going to begin this week where the parliament will have to initiate a debate on these two bills. It is yet to be seen how both Houses of Parliament grant their stamped approval on the controversial State Bank of Pakistan Amendment Bill 2021. Top official sources confirmed to The News here on Sunday that the IMF’s Executive Board had removed from its calendar 2022 consideration of Pakistan’s case for completion of the 6th review scheduled for January 12 and release of $1 billion under the EFF programme. Now the IMF’s Executive Board will consider only Nepal's request under the Extended Credit Facility on January 12, 2022.

When contacted about the exact date for consideration of Pakistan’s request by the Fund’s Executive Board, the IMF’s Resident Chief in Pakistan, Esther Perez Ruiz, replied: "The Board meeting for consideration and eventual approval of the 6th Review under the EFF is being postponed at the request of the authorities. The new date is yet to be determined."

Now Pakistani authorities say that the IMF’s Executive Board was expected to meet by end January 2022 or early February 2022 for considering Pakistan’s request for completion of the 6th review and release of $1 billion tranche under the EFF program.

The Ministry of Finance thinks that the Tax Laws Supplementary bill was expected to be approved probably next week from the National Assembly. However, the SBP’s Amendment Bill may take time because it requires approval of both Houses of Parliament, so the treasury benches will have to devise an effective strategy to get smooth sailing for its approval.

The Pakistani side argued that the IMF’s staff had placed two conditions, including seeking approval of the parliament on two key bills, including Tax Laws Supplementary Bill and the second, State Bank of Pakistan (SBP) Amendment Bill 2021.

The government had introduced these two bills before the Parliament and currently the Upper House of Parliament (Senate) was scrutinising mini budget for finalising its recommendations on mini-budget, known as Tax Laws Supplementary Bill 2021 under which the government proposed withdrawal of GST exemptions, jacking up tax on vehicles registration, increasing withholding tax on mobile users from 10 to 15 percent and some other administrative changes and promised to collect tax revenues to the tune of Rs343 billion on per annum basis.

However, independent economists estimate that the withdrawal of GST exemptions and other measures through the Tax Laws Supplementary Bill, if approved by the Parliament in its existing shape, could hardly fetch Rs200 billion maximum, so it was yet to be seen how much the IMF staff had estimated revenues with the help of withdrawal of GST exemptions and other taxation measures.

The parliament has not yet kick-started its deliberations on the controversial SBP Amendment Bill 2021 because many independent economists and analysts suggested that it required major reviews, changes and only then it could be approved. Otherwise, the government might have to face stiff resistance, especially from the opposition benches.