Minister admits hiccups in IMF programme

Aurangzeb apprises NA committee of several missed targets

ISLAMABAD:

Finance Minister Muhammad Aurangzeb admitted on Monday that there were hiccups in the implementation of the International Monetary Fund (IMF) programme but said that the government remained resolute in its resolve to complete the $7 billion programme.

The finance minister made the statement in a briefing to the National Assembly Standing Committee on Finance, amid opposition's demand to also disclose the assets of the military and the judiciary – which is currently limited to only civil servants – as part of the IMF condition.

The ministry also revealed to the committee that it too failed to meet an IMF condition on debt maturity, further lengthening the queue of the departments that have so far failed to meet some of the IMF conditions.

The Federal Board of Revenue (FBR) and the provinces were already falling behind the IMF deadlines, which led to a sudden visit by the IMF staff to Pakistan.

"There are going to be hiccups but our administration is clear that we are going through it and also want to take along the coalition partners", the finance minister told the committee on the status of the IMF deal before seeking to shut down the doors to the media.

Syed Naveed Qamar of the Pakistan Peoples Party (PPP) chaired the standing committee meeting and said that the finance minister has requested to hold the in-camera meeting. The committee members opposed the minister's request but Qamar, while exercising his right, asked the media to leave.

Before the media left the room the discussion was enough to confirm that there were troubles in the implementation of the $7 billion IMF programme that the global lender had approved on September 25th, this year. "It is a comprehensive programme and obviously there will be hiccups", said Qamar.

The Sindh government has issues in the implementation of the National Fiscal Pact, according to the finance ministry sources.

The minister's statement came days after the IMF launched an unscheduled visit after reports that some of the programme targets went off the mark, soon after its approval by the executive board.

In his opening statement, the finance minister said that during his last visit to Washington, people acknowledged Pakistan's performance in the past two years but added that "strong implementation" was required to stay on the course.

Finance Secretary Imdadullah Bosal gave a briefing to the committee on the implementation status of the conditions agreed under the IMF programme. He said that the Extended Fund Facility was in continuation of the last IMF programme.

However, the secretary's briefing to the standing committee revealed that even the finance ministry failed to meet the condition.

The finance ministry "missed" the indicative target of increasing the weighted average time-to-maturity condition of the local currency domestic debt to two years and eight months by end September, Bosal disclosed.

The secretary further disclosed that the condition to spend Rs685 billion on health and education during the first quarter was also "missed".

Furthermore, the federal and provincial governments had failed to meet the condition despite the finance minister describing "child stunting and learning poverty as existential issues".

The finance secretary also told the standing committee that the FBR "missed" its three-month target of Rs2.652 trillion by a margin of Rs89 billion. The shortfall had now widened to a whopping Rs341 billion by end of November, according to the FBR's statistics.

In an interesting development, the Inland Revenue Service Officers' Association (IRSOA) issued a press statement and blamed the government for the tax shortfall.

The IRSOA solely and categorically attributed the persistent shortfall and inability to achieve the assigned revenue targets by the FBR to the myopic and parochial policy framework instituted by the administration.

It added that the policies being pursued by the FBR administration in the name of the so-called "Transformation Plan" have led to widespread disgruntlement among the FBR officers on the one hand and caused a serious deviation in the revenue collection efforts on the other.

The association said that the recent large-scale transfer and posting of junior officers in particular to far-flung areas without the provision of basic facilities and stigmatising them with the label of corruption based on subjective criteria had led to further discontent and dissatisfaction among the officers.

The IMF had also set a condition to discontinue gas supplies to industries by end-January 2025. The finance secretary told the committee that "the Petroleum Division has expressed concerns on the structural benchmark to IMF during their recent visit; however, the IMF has not agreed so far".

The secretary stated that the IMF had also set a condition to amend the Civil Servants Act to ensure that the assets declarations of high-level public officials, including assets of beneficially owned by the member of their family were digitally filed and publically accessible. The deadline will end in February.

"I have recommended that the assets of the army and the judiciary should also be disclosed as part of the IMF condition", said Omar Ayub Khan, the opposition leader, who is a member of the standing committee.

While briefing the media on the in-camera meeting, Omar said that the finance minister and the secretary meaningfully smiled on his recommendation.

he added that he asked the finance ministry to share the details of the spending on the Special Investment Facilitation Council (SIFC) and the consequent foreign investment that it had brought to Pakistan since its inception. He said that the finance ministry could not share any details.

The opposition leader in the National Assembly further said that it emerged from the in-camera meeting that the government did not have plan to bridge the yawning tax shortfall, which increased to Rs341 billion in just five months.

Omar Ayub said that the FBR also disclosed that against the annual target of getting Rs120 billion from excise duty on filters of the cigarettes, there was a paltry collection due to smuggling. He added that smuggling was not possible without active involvement of the law enforcement agencies.

He said that the IMF condition to increase agriculture income tax rates by three times was also not met.