GENEVA/ISLAMABAD: Pakistan has achieved all of its economic goals in terms of performance, the International Monetary Fund (IMF) said in an end-of-mission press release issued Friday pertaining to its 10-day talks with the government.
“Considerable progress has been made in the last few months in advancing reforms and continuing with sound economic policies,” the global financial body said.
The IMF further noted in its statement that “all end-December performance criteria were met and structural benchmarks have been completed” and in terms of performance, Pakistan achieved all economic targets.
“Steadfast progress on program implementation will pave the way for the IMF Executive Board’s consideration of the review,” it said, adding that “development and social spending have been accelerated” through programme implementation.
Reduce reliance on China
The News reported earlier today that the visiting IMF mission decided to extend its stay in Pakistan to work further on differences over immediate measures to reduce the revenue-expenditure gap.
The financial body asked Pakistan “to reduce its trade and commerce reliance on Beijing” and look for other international options by signing free trade agreements (FTAs) with other countries as well, according to senior finance ministry sources, bringing a new challenge as Islamabad was not prepared to even reconsider this position.
The Federal Board of Revenue (FBR), The News reported Thursday night, wished for a further reduction in its revised Rs5.24-trillion target — already cut down from Rs5.50 trillion — but the IMF desired to focus on removing distortions and expanding narrowed tax base on a permanent basis.
‘Viable alternate plan’
A top official quoted the IMF team as saying during their interaction that without the reform plan, however, it would not show leniency over the FBR’s inability to maximise revenues efforts. The body stressed that the Pakistani government must correct the situation halfway instead of waiting for the next fiscal year if the need arises.
Secondly, the PTI government was opposed to hiking electricity and gas tariffs for the next 12-18 months as Prime Minister Imran Khan has asked relevant ministries to freeze tariffs for a certain period. However, the IMF highlighted that the cash-bleeding losses would not be curtailed if there was no cost recovery of energy utilities.
“The IMF is asking for a viable alternate plan,” the sources said.
Extension in stay
According to the IMF delegation’s schedule available with The News, it was scheduled to hold talks with different ministries, the State Bank of Pakistan (SBP), and other departments from February 3-13, 2020, under the $6-billion Extended Fund Facility (EFF).
Speaking to The News earlier, IMF Resident Representative for Pakistan Teresa Daban Sanchez said: “There is not planned any interaction with media until the discussions are finalised.”
However, a finance ministry spokesperson had said Thursday night some members of the IMF, as per the plan, would visit Karachi today (Friday).
Boost non-tax income by Rs400bn
Sources had informed Geo News on Wednesday that Pakistan and the IMF agreed not to introduce a rise in the tax rates until June 2020 as the talks between the two parties concluded in a meeting chaired by Prime Minister Imran Khan’s Adviser on Finance and Revenue Dr Abdul Hafeez Shaikh and IMF Mission Chief for Pakistan Ernesto Ramirez-Rigo.
The two sides had agreed not to introduce either a mini-budget or a reduction in the tax collection target. It was, however, advised that Pakistan bump up its non-tax income by Rs400 billion to boost revenue collection.
The country would also ensure implementation of the privatisation road map and not jack up the sales tax from 17 to 18 percent.
On the other hand, sources in Finance Ministry had informed Geo News on Wednesday that the country, for the most part, achieved most of the goals the IMF had set for it. The body was also satisfied over its monetary and current account deficits, they had added.
Sources had noted that Pakistan would make adequate efforts to achieve the tax collection target and that a road map to bring down the deficit and losses had been readied.