An IMF team is in Pakistan on an 11-day review mission. At stake for Pakistan is about $450 million – the second tranche of the $6 billion economic bailout package. Pakistan has secured $1.44 billion through an upfront release of about $991 million at the time of the agreement signing in July 2019 as well as the first tranche of $452 million in December 2019. The government’s economic team – led by PM’s Adviser on Finance Dr Hafeez Shaikh, but without Shabbar Zaidi, the FBR chairman who is on a mysterious sick leave – is tasked with satisfying the IMF mission that the Government of Pakistan is on track to fulfil the agreed conditionalities and its performance is good enough to secure the tranche.
The statistics, however, does not support the government position. A massive shortfall in tax collection – Rs385 billion in the first seven months of the ongoing fiscal year as against the targeted Rs2.79 trillion – is what does not make the second tranche an easy release. How the incumbent government plans to make up for this shortfall in revenue – or part of it – is something that the visiting IMF team is understood to be concerned about. According to reports, the global lender wants the Imran Khan-led government to impose new taxes so as to achieve the tax collection target of Rs5.238 trillion, revised down from the Rs5.55 trillion initially agreed.
And thus looms yet another minibudget – a third by the PTI government during its 17-month tenure so far – with reports that taxes worth Rs200 billion could be imposed on the people who are already reeling from unprecedented food inflation as well as high utilities charges and fuel prices. There are also reports of the government – aware of the people’s economic hardships and its political cost to itself – is trying its best to convince the IMF into further reducing the tax target to Rs4.8 trillion. The talks are supposed to conclude on February 12. So it’s fingers crossed till then.
Published in The Express Tribune, February 5th, 2020.
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