K-P fulfils conditions for IMF deal revival

CM’s special assistant says financial crisis has affected entire country, especially K-P

PESHAWAR:

Special Assistant to the Khyber-Pakhtunkhwa (K-P) caretaker Chief Minister on Revenue, Pir Haroon Shah has confirmed the fulfillment of all conditions and requirements for the expected agreement with the International Monetary Fund (IMF) by the K-P government.

In a press statement issued from his office on Friday, Pir Haroon Shah, said that the financial crisis has affected the entire country, especially K-P province, but the provincial government is making efforts to control all unnecessary expenditures, with visible results.

He stated that a condition related to General Sales Tax (GST) was imposed by the IMF, which was approved by the provincial cabinet yesterday, and now it is hoped that an agreement with the IMF will be reached at the federal level.

He further added that the province is expected to benefit from the implementation of the relevant tax, amounting to billions of rupees through the levy of general sales tax.

Regarding increasing revenue of departments, the he observed that it is the urgent need of the time to increase the revenue of all departments in the province and sustain it on a stable basis.

In this regard, all options are under consideration at the level of the revenue department, as services need to be made possible in accordance with the demands of the modern era.

He stated that instructions have been issued to the revenue department to eliminate unnecessary expenditures. Public taxes will only be spent on public services.

Background

In March IMF said that Pakistan has made ‘substantial progress’ toward meeting policy commitments needed to unlock loans the country needs to avoid default, Bloomberg News reported.

The international lender said Pakistan has a few more tasks before it can unlock a $6.5 billion loan to avoid a default, putting pressure on the government to secure assurances from countries that have promised financing support.

Pakistan is now the only South Asian country that’s yet to secure a bailout from the multilateral lender as Sri Lanka clinched financing this week and Bangladesh pushes on with carrying out IMF-mandated reforms.

“A staff-level agreement will follow once the few remaining points are closed,” the report quoted Esther Perez Ruiz, the IMF’s resident representative for Pakistan, as saying.

“Ensuring there is sufficient financing to support the authorities in the implementation of their policy agenda is the paramount priority.”

Finance Minister Ishaq Dar said last week that the IMF wanted to see countries finalise commitments they’ve made to help Pakistan shore up its funds before signing off on the bailout package.

Pakistan needs to repay about $3 billion of debt by June, while $4 billion is expected to be rolled over.

The country has taken tough measures including increasing taxes and energy prices, and allowing its currency to weaken to restart a $6.5 billion IMF loan package.

Published in The Express Tribune, April 15^th, 2023.