Govt requests IMF for review of loan terms

FBR can achieve revenue target without imposing more taxes

ISLAMABAD:

The federal government has requested the International Monetary Fund (IMF) to review the terms of its lending programme for Pakistan in the wake of recent flood devastation in the country, stressing that government could achieve its revenue target without imposing new taxes.

In this regard, according to finance ministry sources, the foreign affairs ministry had been asked to play role to bring the IMF programme – which had hit snags because of differences with the government on several issues – back on track.

Last week, Prime Minister Shehbaz Sharif decried a “callous IMF”, saying that the global lender had put shackles on the country because of which the government’s efforts for the rehabilitation of flood victims and providing relief to the masses had become a huge challenge.

Also, Minister of State for Finance Ayesha Ghaus Pasha told a National Assembly committee last week that there were “differences with the IMF on several issues”, which were delaying the ninth review of Pakistan’s economic performance under a 36-month programme supported by an Extended Fund Facility arrangement.

The sources said that Pakistan wanted that the IMF should review its terms of the agreement because of flood devastation and other reasons. They added that because of global inflation and economic crises, the government could not take more “tough decisions”.

Securing the IMF tranche is crucial to unlock funding from bilateral and multilateral partners, as the country’s forex reserves stand at critically low level. According to the sources, the IMF was sceptical about the reliability of figures shared by the government about the impacts of the floods.

Pakistan and the IMF had a round of engagement on November 18 but could not finalise a schedule for formal talks on the overdue ninth review. The talks, originally due in the last week of October, were rescheduled to November 3 and then kept on facing delays following gaps in estimates by the two sides.

According to sources Pakistan has told the global lender that the government could increase its revenue without imposing new taxes and it would reduce the current account deficit by the end of the year. They added that the Federal Board of Revenue (FBR) had also prepared a plan for recoveries from tax evaders.

Under the FBR plan, the sources said, the government would meet the target of Rs7,100 billion by improving tax collection. In this regard, they mentioned the measures to improve tax collection and reduce imports adopted in August 2022 through a presidential ordinance.

“Now, since the period of this ordinance is about to expire, it has been decided to issue the ordinance again and a draft ordinance is being finalised by the FBR,” said a source. “The ordinance will be finalised and it will soon be sent to the president for promulgation.”

Pakistan is trying to restart negotiations with the IMF on for the next economic review. After completion of the review, the next instalment can be released, the sources said, adding that the IMF had asked Pakistan for more information to finalise its ninth review.

(WITH INPUT FROM NEWS DESK)