IMF miffed with Pakistan for claiming 'targets achieved' even before lender's review

The IMF has voiced unhappiness with cash-strapped Pakistan’s declaration that it has met all structural benchmarks, as well as quantitative and indicative objectives, even before the global lender scrutinised and completed its analysis.

A delegation from the International Monetary Fund has arrived in Islamabad to hold negotiations before releasing the much-needed last $1.1 billion tranche of the $3 billion rescue plan agreed upon last year.

Media reports state that Nathan Porter, the head of the IMF Mission, and his colleagues expressed their dissatisfaction with the finance ministry for announcing its decision before the $3 billion Standby Arrangement (SBA) programme was fully reviewed. They had only recently begun the programme and would only provide recommendations after examining official data from various sectors of the country’s economy.

Before receiving any reply from the IMF, the finance ministry had earlier declared in its official handout that they had satisfied all structural benchmarks and other goals.

In the first round of the review discussions, the finance ministry team was grilled by the IMF review mission, and The News International said that none knew how to reply.

However, Finance Minister Aurangzeb took the stance that he had taken note of it and such an episode would never be repeated in future.

Pakistan and the IMF kick-started parleys for the completion of the second review and striking an agreement on the Memorandum of Economic and Financial Policies (MEFP) after which the release of the last tranche of $1.1 billion will be presented before the Fund’s Executive Board in the second week of April 2024.

The possibility of any mini budget cannot be ruled out at the moment, so the IMF may come up with prescriptions of raising rates of different taxes, especially General Sales Tax (GST) in order to fetch additional revenues on an instant basis. It will only become affirmative if the FBR faces any shortfall in achieving the tax collection target of Rs879 billion for March 2024, top official sources confirmed while talking to the newspaper on Thursday.

The IMF team also asked about the possibility of achieving the target for the last quarter (April-June) to meet the desired annual tax collection target of Rs 9,415 billion.

The IMF team inquired about the exact timeframe for unveiling the simplified tax scheme for retailers and the political will of the incumbent regime in this regard.

The FBR high-ups were not able to reply.

The IMF also held crucial talks with energy sector high-ups and asked them to come up with a plan to restrict the circular debt to avoid any further accumulation.

The Ministry of Energy high-ups said that they were withdrawing gas subsidies for fertiliser plants and wanted direction on cheaper fertiliser bags for farmers to reduce the input of the farm sector.

According to an official announcement made by the finance ministry on Thursday, an IMF mission called on Federal Minister for Finance and Revenue Muhammad Aurangzeb at the Ministry of Finance.

The mission is in Pakistan to conduct the Second Review of the Stand-by Arrangement (SBA). The finance minister welcomed the mission and expressed the government’s commitment towards working with the IMF on the reform agenda for economic growth and stability of Pakistan, according to the paper.