IMF criticises Pak finance ministry declaration that all targets have been achieved

Islamabad: The IMF has expressed its displeasure to cash-strapped Pakistan's claim that it had achieved all structural benchmarks, and quantitative and indicative targets even before scrutinising and completing the review by the global lender.

A team from the International Monetary Fund has reached Islamabad to hold talks before releasing the much-needed final USD 1.1 billion tranche of a $3 billion bailout package which was agreed last year.

According to media reports, the IMF Mission chief Nathan Porter and his colleagues expressed their displeasure that the finance ministry had announced its verdict before the completion of the review process under the USD 3 billion Standby Arrangement (SBA) programme, which they had just started and would come up with their prescriptions only after analysing the official data of various sectors of the national economy.

Earlier, the finance ministry announced in its official handout that they had met all structural benchmarks and other targets before getting any feedback from the IMF.

The IMF review mission grilled the finance ministry team in the maiden session of the review talks and everyone seemed clueless about how to respond, The News International reported.

However, Finance Minister Muhammad Aurangzeb took the stance that he had taken note of it and such an episode would never be repeated in future.

Pakistan and the IMF kick-started parleys for the completion of the second review and striking an agreement on the Memorandum of Economic and Financial Policies (MEFP) after which the release of the last tranche of USD 1.1 billion will be presented before the Fund’s Executive Board in the second week of April 2024.

“The possibility of any mini budget cannot be ruled out at the moment, so the IMF may come up with prescriptions of raising rates of different taxes, especially General Sales Tax (GST) in order to fetch additional revenues on an instant basis. It will only become affirmative if the FBR faces any shortfall in achieving the tax collection target of Rs879 billion for March 2024,” top official sources confirmed while talking to the newspaper on Thursday.

The IMF team also asked about the possibility of achieving the target for the last quarter (April-June) to meet the desired annual tax collection target of Rs 9,415 billion.

The IMF team inquired about the exact timeframe for unveiling the simplified tax scheme for retailers and the political will of the incumbent regime in this regard.

The FBR high-ups were not able to reply.

The IMF also held crucial talks with energy sector high-ups and asked them to come up with a plan to restrict the circular debt to avoid any further accumulation.

The Ministry of Energy high-ups said that they were withdrawing gas subsidies for fertiliser plants and wanted direction on cheaper fertiliser bags for farmers to reduce the input of the farm sector.

According to an official announcement made by the finance ministry on Thursday, an IMF mission called on Federal Minister for Finance and Revenue Muhammad Aurangzeb at the Ministry of Finance.

The mission is in Pakistan to conduct the Second Review of the Stand-by Arrangement (SBA). The finance minister welcomed the mission and expressed the government’s commitment towards working with the IMF on the reform agenda for economic growth and stability of Pakistan, according to the paper.