IMF agreement on second tranche expected this week: Georgieva

Fund's top official urges increase in tax collection to sustain economy

The agreement for the release of the second tranche of funds under the International Monetary Fund's (IMF) $3b Standby Arrangement (SBA) with Pakistan is expected this week, said IMF Managing Director Kristalina Georgieva on Wednesday.

"I expect an agreement of the review to come within this week," said Georgieva during an interview with Bloomberg Television's Haslinda Amin in Singapore.

She urged the federal government to ensure effective tax collection.

The confirmation comes amid the IMF's concerns regarding the upcoming general elections and the role, mandate and powers of the Special Investment Facilitation Council (SIFC). The Fund has also sought a further increase in electricity prices.

The tentative date for the IMF board meeting for the next review is March 1, which indicates that the third review for the $1.2b tranche should take place in around February next year.

Read Crucial $3b IMF lifeline comes with tough conditions

The current $3b IMF bailout was given for a period of nine months, ending in April next year on the assumption that the new government would enter into another programme after the elections.

If the second quarterly review is successful, it will enable the release of the second tranche of funds worth $710m.

The first evaluation of the short-term loan agreement was initiated on November 2 by the IMF's technical staff and concluded on November 10.

“The Pakistani authorities, especially the finance minister deserve credit for a very difficult time sticking to the programme that they have," said Georgieva during the interview with Bloomberg Television on Wednesday.

In response to a question over the concerns affecting the release of the tranche, she referred to "tax collection" as a predominant issue in the country.

“The country today collects 12 per cent tax-to-GDP. We are saying it has to be at least 15pc to help the revenues to sustain the functioning of your economy,” said the IMF's top official.

“For the people in Pakistan that can pay taxes, collect it from them,” she recommended.