ISLAMABAD: If Pakistani authorities want to restart the halted loan programme, they must take steps to implement the precondition tasks listed by the International Monetary Fund (IMF) within the next three weeks.
The IMF advised the Pakistani government that “all necessary initiatives” must be taken at this time.
The deadline for carrying out all necessary steps to enable the release of a staff-level agreement and a $1 billion tranche under the Extended Fund Facility has been set at two to three weeks (EFF).
Ishaq Dar, the finance minister, is scheduled to speak with his core economic team in a few days to develop a consensus on the steps that must be taken in the coming days and weeks to prepare for the resumption of the IMF programme.
According to a senior official who spoke to The News on Friday, “now the ball is in Islamabad’s court whereby the IMF asks the government to take actions on account of fixing the cash-bleeding energy sector, including power and gas, taking additional taxation measures, and pursuing structural reforms in the remaining period of the Fund programme.”
The State Bank of Pakistan’s declining foreign exchange reserves, which fell to $6.11 billion, were taken into consideration as Pakistan and the IMF representatives held another round of virtual negotiations on Thursday. The finance minister gave the lender the assurance that Pakistan expected to receive dollar inflows from one friendly nation by late December or early January.
According to the sources, the Energy Ministry was urged by the Finance Ministry to modify the Circular Debt Management Plan (CDMP) for 2023.
According to one official, “we cannot permit the imposition of a power surcharge in the range of Rs 31.60 or Rs 12.69 per unit hike, keeping in view the attached political cost,” and they added that the relevant authorities were tasked with developing the revised CDMP in such a way that Pakistan could increase the power tariff on the lower side.
In order to lessen its dependency on subsidies, the government could also increase efficiency and governance at the same time. The Ministry of Energy has consented to create an updated CDMP roadmap for 2022–2023 that is acceptable to the government and the IMF.
According to unbiased analysts, the government may want to walk a tightrope by taking a balanced approach.
The government would need to come up with a workable plan to eliminate the monster of the circular debt that has accumulated in both the power and gas sectors up to a staggering amount of Rs4 trillion because the restoration of the IMF programme through patchwork may not succeed.
The IMF has agreed to provide a Rs340 billion adjustment for the budget deficit increase brought on by expenses connected to the floods in the current fiscal year.
The Fund has also urged Pakistan to take additional steps to close the huge gap preventing the achievement of the FBR’s envisioned goal. The FBR’s revenue collection goal of Rs7,470 billion for the current fiscal year may not be met, according to the IMF’s assessment.
The IMF also voiced concern over the fact that there were only 2.913 million income tax filers as of the end of the first quarter compared to 3.4 million in the previous fiscal year.
According to FBR high-ups, since businesses must file their corporate taxes by December 31, 2022, the number of filers may increase even more.
The government could impose additional customs taxes and offer another tax amnesty programme that applies to the combined districts of FATA/PATA as further taxation measures.
The Petroleum Development Levy is in deficit due to nontax revenues, and the government is considering paying the banking industry large rewards from recent gains made through currency manipulation.
According to the sources, it was one of the choices, and to improve tax collection, the government would also raise the Petroleum Levy on diesel in the upcoming months.