Minister of Finance Muhammad Aurangzeb confirmed on Tuesday that the discussion between Pakistan and the International Monetary Fund (IMF) for the first semi-yearly review of $7Bn had started, he said that the country was “well positioned” for the talks. In July, Pakistan and the IMF reached the 3-year, $7bn financial aid package, According to the new programme the country has been allowed to fix the macroeconomic stability and induced situations for stronger, more comprehensive, and resilient growth.
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IMF’s nine-member mission has started its first semi-yearly review of Pakistan’s $7bn Extended Fund Facility (EFF). The Financial Minister confirmed, “They are here, we will have two rounds of talks, First technical and the other is policy level.” He said, “I think we are well-positioned for the review.” In the leadership of Nathan Porter the IMF will hold discussions with the Authorities of Pakistan for 10 days from 3 March to 14, judging the country’s conformance with quantitative performance criteria, framework criteria, and indicative goals under the 37-month programme.
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A senior Government official who is involved in the preparations for the IMF review said, there were some technical problems for certain given time limits, But they had been controlled with some delays – within a week or a month. The official said, the most condemning weakness noticed so far has been the revenue deficiency against programme goals. But he rushed to add that he had been more than the payback through a higher-than-targeted primary budget excess greater-than-estimated revenue-to-GDP ratio payable to better receipts from non-tax revenues like central bank profit, telecom profits, petroleum levy, etc.
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In Progress, 37 months EFF programme is composed of six reviews over the life of the bailout, and the release of the share of around $1bn will be possible on the success of the performance review. Before the IMF mission visit, the leader repeated last week that its programme is focused on raising Pakistan’s notably low tax-to-GDP ratio by 3 percent of the GDP while improving the equity and efficiency of the tax system by expanding the tax base and improving tax compliance.
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Three significant areas are in focus including, expanding direct taxes by bringing retailers, property owners, and agricultural income into the tax net, Justifying personal and corporate income taxes by decreasing exceptions and streamlining rates in the general sales tax system, and intensifying Federal Excise Duty coverage and eradicating tariff exemptions to increase customs revenue. A separate IMF technical mission was in Pakistan last week to debate on $1bn in climate financing on top of the EFF.
