IMF Mission
ISLAMABAD: The International Monetary Fund (IMF) review mission has prolonged its stay in Pakistan by a day, signaling a lack of consensus between both parties regarding a staff level agreement for the second review and disbursement of the third tranche, valued at $1.1 billion under the Stand By Arrangement (SBA), reported on Tuesday.
The IMF’s insistence on receiving assurances from Prime Minister Shehbaz Sharif regarding key issues, such as the proposed hike in electricity and gas tariffs from July 1, as well as quarterly tariff adjustments and fuel price adjustments, has contributed to the impasse.
While the provinces have agreed to target a revenue surplus of Rs600 billion, this area remains contentious, suggesting potential adjustments to finalize the Memorandum of Economic and Financial Policies (MEFP).
Another point of contention is the implementation of the retailers’ scheme, with the Federal Board of Revenue (FBR) advocating for its inclusion in the next budget due to the complexities involved and its limited impact on revenue collection if implemented immediately.
The adjustment of monthly revenue collection targets by the IMF, with hopes that the FBR will achieve its Rs9,415 billion tax collection target by June 30, 2024, underscores the urgency of reaching a consensus.
Pakistan is also contemplating a long-term bailout package under the Extended Fund Facility (EFF) program, with plans to communicate this informally to the IMF mission.
Formal application submission is anticipated during the IMF/World Bank annual spring meetings scheduled from April 15 to 20, with Finance Minister Muhammad Aurangzeb leading the Pakistani delegation.
The tight timeframe necessitates swift resolution, as the existing SBA is set to expire on April 12, 2024.
The FBR faces considerable challenges in meeting its Rs9.4 trillion target by the fiscal year-end, particularly in March and the last quarter (April-June), where significant revenue collection is required.
Despite PM directives for increased refunds, achieving the June revenue collection target poses a formidable task for the tax collecting authority.
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