ISLAMABAD: The technical team of the IMF has arrived in Pakistan for initial negotiations on a new long-term loan program of 6 to 8 billion dollars with Pakistan.
According to sources, some members of the IMF mission have reached Pakistan, while the IMF-led mission is likely to reach Pakistan on the night of May 16. In order to make it, it should immediately cut its expenses from 163 billion rupees to 183 billion rupees.
On the first day of the meeting, the IMF delegation has reiterated its old demand that there will be no compromise on the primary budget surplus target of 0.4 percent of GDP. While briefing said that it may face a shortfall of 163 to 183 billion rupees in tax collections at the end of the current financial year.
The FBR has assured the IMF that it will collect Rs 20-25 billion by taking administrative steps under Statutory Order 350.
FBR further stated that its direct tax collection is exceeding the target with a growth rate of 40 percent, customs duties growth rate is 13 percent despite restrictions on imports, but Rs 215 billion stuck in courts is also challenging. As earlier the government had assured that the courts would clear them between April and May, but now the government is assuring that a decision will be made by June.
It should be noted that this money is trapped under the super tax, which the government imposed on the income of real estate and commercial banks.
Sources say that while the IMF has called for cuts in expenditure as much as the shortfall in revenue, the government is being too cautious at first and has little option to cut spending.
The IMF has said in its report on Friday that Pakistan’s new government has delayed the implementation of some reforms, the country’s uncertain political situation and social tension may affect economic stabilization policies. While F praised Pakistan’s improved performance in meeting key targets in its final staff-level report on the $3 billion Standby Arrangement Agreement, it also highlighted the risks posed by political tensions and extraordinary external financing requirements. are born from
The IMF says downside risks remain unusually high while the new government has signaled continuation of policies on small businesses, but political uncertainty remains important, social tensions that complicate the political landscape. As the letter reflects and inflation may affect the implementation of reforms, Pakistan has successfully achieved its limited targets, the challenges ahead are daunting and will require sustained efforts to address them effectively. Pakistan’s financial risks are high, including new debt defaults and refinancing risks.
Improving Pakistan’s ability to repay the IMF is critical to maintaining external debt sustainability and depends on strong policy, the IMF said, initiated by the caretaker government. Some reforms have been delayed in implementation, which require renewed efforts to speed up implementation.
The scheme to register retailers and collect their tax returns, which was supposed to start on January 1, 2024, has been postponed, the IMF report said, due to Pakistan’s decision to convert the FBR into a semi-autonomous revenue authority. The project has also been delayed by hiring an international consulting firm to finalize the reforms.
A senior FBR official said the government has hired the services of Mackenzie consultancy firm for a period of three years for a fee of $4.2 million, which will be paid by the Bills and Melinda Gates Foundation.
A government official, speaking on condition of anonymity, said the IMF should also take note of its staff’s miscalculation of the current account deficit, which has ballooned to 100 percent.
