IMF Wants Pakistan To Meet All Demands Within Three Weeks

IMF Wants Pakistan To Meet All Demands Within Three Weeks
The IMF has shared lists of prerequisite actions, and told Pakistani authorities in plain words that Islamabad will have to move towards implementing all the demands in the next 15 to 20 days for reviving the stalled programme.

The time has now come for taking “all required actions” by Pakistani authorities, and there is a timeframe of two to three weeks for implementing all required actions that could pave the way for striking a staff-level agreement and the release of $1 billion tranche under the IMF's Extended Fund Facility (EFF).

Finance minister Ishaq Dar is expected to hold consultations with his core economic team in a couple of days for evolving consensus on the actions required in the coming few weeks to pave the way for the revival of the IMF programme.

“Now the ball is in Islamabad's court whereby the IMF asks the government to take actions on account of fixing cash-bleeding energy sector including power and gas, taking additional taxation measures and pursuing structural reforms in the remaining period of the Fund programme,” top official sources confirmed on Friday.

Senior officials from Pakistan and the IMF held another round of virtual talks on Thursday night, where Ishaq Dar gave an assurance to Fund staff that Pakistan was expecting to receive dollar inflows from one friendly country by the end of the ongoing month, or by early next month, keeping in view the dwindling foreign exchange reserves held by the State Bank of Pakistan which have nosedived to $6.11 billion.

When asked about the required action plan under IMF conditions, sources said the Ministry of Finance asked the Ministry of Energy for revising the roadmap for curtailing the Circular Debt Management Plan (CDMP) for the financial year 2023. “We cannot allow the imposition of power surcharge in the range of Rs 31.60 or Rs 12.69 per unit hike, keeping in view the attached political cost,” said one official. The relevant authorities were assigned to come up with the revised CDMP in such a way where the power tariff could be revised upward on the lower side, while efficiency and governance could be improved to reduce reliance on piling up of required subsidy as well. The Ministry of Energy has agreed to come up with a revised roadmap for the CDMP for 2022-23 which would be acceptable to both the government as well as the IMF.

Independent analysts say that it could be a wish list of the government to move on a tightrope by trying to strike a balanced approach, but the revival of the IMF programme through patchwork might not work. So the government would have to come up with a viable plan to erase the monster of the circular debt piled up to a whopping figure of Rs 4 trillion in both electricity and gas sectors. The IMF has agreed to grant an adjustment of Rs 340 billion for hiking the budget deficit on account of flood-related expenditures in the current fiscal year.

The IMF also asked Pakistan to take additional measures for bridging the yawning gap to materialize the FBR’s envisaged target. The IMF has assessed that the FBR might not achieve the desired revenue collection target of Rs. 7,470 billion for the current fiscal year. The IMF also expressed concerns that the number of filers so far stood below three million income tax filers, as it stood at 2.913 million against 3.4 million received in the last fiscal year. Senior officials at FBR purport that corporate returns would be filed by 31 December 2022, so the number of received filers might further go up.