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Thursday June 13, 2024

IMF asks Pakistan to do more

The IMF official did not explain the required “additional measures” to revive the stalled $6 billion programme

By Mehtab Haider
June 14, 2022
IMF’s Resident Chief in Pakistan Esther Perez Ruiz. Photo: elperiodico.com.gt
IMF’s Resident Chief in Pakistan Esther Perez Ruiz. Photo: elperiodico.com.gt

ISLAMABAD: The International Monetary Fund has asked Pakistan to take “additional measures” to strengthen the budget and bring it in line with key objectives of the fund programme. It was the response of IMF’s Resident Chief in Pakistan Esther Perez Ruiz when asked for her comments on the budget for 2022-23.

The IMF official said: “We note the submission of the draft budget to the National Assembly last Friday. Discussions with the authorities continue to obtain more clarity on certain revenue and spending items and allow for a full assessment,” and added “however, our preliminary estimate is that additional measures will be needed to strengthen the budget and bring it in line with key programme objectives.”

The Fund staff stands ready to continue to support the authorities’ efforts in this respect and, more generally, in the implementation of policies to promote macroeconomic stability. The IMF official did not explain the required “additional measures” to revive the stalled $6 billion programme under the Extended Fund Facility (EFF).

However, official sources explained the additional measures and stated that the IMF wanted to see further hike in petrol and diesel prices within this week. The government had already hiked the POL prices by Rs60 per liter in the domestic market before the announcement of the budget, now another hike in POL prices was on cards within this week.

There is still a subsidy on petrol and diesel and partial withdrawal is expected soon to move towards striking a staff-level agreement with the IMF. The IMF is also asking the government to implement the hike in power tariff as determined by NEPRA for hiking base line tariff to the tune of Rs7.91 per unit as well as make fuel adjustments on a quarterly basis.

The IMF also wants revision by bringing changes in the proposed Personal Income Tax (PIT) to make it progressive, as the FBR proposed reducing number of slabs from 12 to 7 but the tax rates were reduced for salary earners up to Rs1 million per month. The IMF has made it clear that the tax relief provision of Rs47 billion is totally unacceptable to the IMF so the government will have to make changes in it.

It is not yet known whether the IMF has objected to the petroleum levy projection of Rs750 billion or not because the government has jacked up limit of levy from Rs30 to Rs50 per liter but how it will be implemented is not known in the wake of persistent higher prices in international market.

Finance Minister Miftah Ismail had told this scribe last week that the government would move ahead with imposition of the petroleum levy in the range of Rs5 per liter and in a gradual manner and said that the government could not slap Rs50 per liter levy in one go at all.