The IMF has shared lists of prerequisite actions and told Pakistani authorities in plain words that Islamabad will have to move towards implementing all demands in the next 15 to 20 days to revive the stalled Fund programme.
Now the time has come for taking “all required actions” by Pakistani authorities, and there is a timeframe of two to three weeks for implementing all required actions that could pave the way for striking a staff-level agreement and releasing of $1 billion tranche under the Extended Fund Facility (EFF).
Minister for Finance Ishaq Dar is expected to hold consultations with his core economic team in a couple of days for evolving consensus on required actions to be taken in the coming few weeks to pave the way for the revival of the IMF programme.
“Now the ball is in the court of Islamabad whereby the IMF asks the government to take actions on account of fixing cash-bleeding energy sector including power and gas, taking additional taxation measures and pursuing structural reforms in the remaining period of the Fund programme,” top official sources confirmed while talking to The News here on Friday.
Pakistan and the IMF high-ups held another round of virtual talks on Thursday night whereby Ishaq Dar gave assurance to Fund staff that Pakistan was expecting to receive dollar inflows from one friendly country by the end of the ongoing month or early next month, keeping in view dwindling foreign exchange reserves held by the State Bank of Pakistan that nosedived to $6.11 billion.
When asked about the required action plan under IMF conditions, the sources said the Ministry of Finance instructed the Ministry of Energy to revise the roadmap for curtailing the Circular Debt Management Plan (CDMP) for the financial year 2023. “We cannot allow the imposition of power surcharge in the range of Rs 31.60 or Rs 12.69 per unit hike, keeping in view the attached political cost,” said one official and added that the relevant authorities were assigned to come up with the revised CDMP in such a way where the power tariff could be revised upward on the lower side. At the same time, efficiency and governance could be improved to reduce reliance on the piling up of required subsidies. The Ministry of Energy has agreed to develop a revised roadmap for the CDMP for 2022-23 acceptable to both the government and the IMF.
Independent analysts say that it could be the government’s wish list to move towards the tightrope by striking a balanced approach. Still, the revival of the IMF programme through patchwork might not work, so the government would have to devise a viable plan to erase the monster of the circular debt piled up in both electricity and gas sectors up to a whopping figure of Rs 4 trillion. The IMF has agreed to grant an adjuster of Rs 340 billion for hiking the budget deficit because of flood-related expenditures in the current fiscal year. The IMF also asked Pakistan to take additional measures to bridge the yawning gap for materializing the FBR’s envisaged target. The IMF has assessed that the FBR might not achieve the revenue collection target of Rs 7,470 billion for the current fiscal year. The IMF also expressed concerns that the number of filers so far stood below three million income tax filers as it stood at 2.913 million against 3.4 million received in the last fiscal year. FBR high-ups apprised that the corporate returns would be filed by December 31, 2022, so the number of received filers might increase further.
The government is considering taking additional taxation measures for slapping other customs duties and granting another tax amnesty scheme belonging to the merged districts of FATA/PATA. Because of nontax revenues, there is a shortfall in the Petroleum Development Levy. The government is considering getting the banking sector high profits as dividends which they earned through currency manipulation in recent months. It was one of the options, said the sources, adding that the government would also increase the Petroleum Levy on diesel in the coming months to maximize revenue collection.
