- Shaukat Tarin says the government and IMF agreed on macroeconomic data till December 2021.
- Pakistan says Pakistan addressed IMF concerns in full.
- He says the IMF team will return tomorrow with a final evaluation.
ISLAMABAD: Expect the IMF to sign off on Pakistan’s seventh review if they can work out their differences with Prime Minister Nawaz Sharif, Finance Minister Shaukat Tarin says.
Concerns about the PM’s relief package and tax amnesty for the industrial sector were fully reported to the IMF mission, Tarin said during the government’s meeting with the IMF.
He added that the IMF delegation would return tomorrow (Friday) to conduct virtual discussions.
The minister stated there was no disagreement on macroeconomic numbers through December 2021 and the seventh review was “nearly done.”
Relative
The IMF opposes the PM’s assistance offer, putting the seventh review in jeopardy.
The IMF will assess PM Imran Khan’s assistance plan this week.
PM Imran Khan outlines economic alleviation measures
When questioned about the IMF’s proposal to eliminate exemptions and boost the rate under the Personal Income Tax (PIT), Tarin replied that nothing was discussed since taxing measures will be considered for the next budget in 2022–23.
Officials told Tarin that it would be impossible to reach an agreement with the IMF at this time.
This month’s vote on a no-confidence motion is going to be a disaster for the country, they said.
By the way, Pakistani officials have told the IMF about a tax break for projects that involve Pakistani ex-pats living in the country for five years.
Pakistan must persuade the IMF that it has not broken its promise to raise the fuel duty by Rs4/month till it reaches Rs30/liter.
This is no longer possible because of the huge rise in the price of oil around the world. The IMF is supposed to be lenient.
The current talks will centre on energy price reform, which tries to align electricity and gas rates with cost recovery and the modified NEPRA and OGRA Acts.
This would require hiking the basic energy rate and reducing cyclical debt growth in the power industry.
They also need to agree on a new way to predict the deficit in the budget.
The government expected a budget deficit of 6.3 percent of GDP, which was anticipated to rise to 7.7 percent in the current fiscal year. The country’s GDP grew from Rs 48 trillion in 2005-06 to Rs 55.5 trillion in 2015-16 due to the rebasing of national accounts.
The GDP is expected to reach Rs 63.8 trillion in the fiscal year 2021-22, while the budget deficit is expected to rise to Rs 4.4 trillion, the biggest ever in absolute terms in the country’s history.
It was estimated at $12.9 billion on the eve of its 6th review, having reached $11.6 billion in the first seven months of the current fiscal year. A current account deficit of $18 to $20 billion is now required by the IMF. To avert the depletion of foreign currency reserves, further funding of $5-$7 billion will be required.
