Aurangzeb unveils his approach to IMF lending

ISLAMABAD: Pakistan is eager to negotiate a larger and the longest Extended Fund Facility (EFF) of the International Monetary Fund (IMF) programme to achieve macroeconomic stability in the country.

This was stated by Finance Minister Muhammad Aurangzeb during an interaction with a group of media persons, however, he did not specify the amount Pakistan would be looking forward to requesting the Fund and stated it would be premature to specify it at this point in time.

Aurangzeb highlighted his priorities as finance minister and stated that GDP growth is directly linked to macroeconomic stability.

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He further stated that Pakistan has invited the IMF team for the successful conclusion of the review. The opportunity would also be used to initiate preliminary talks on a larger and longest EFF programme.

The finance minister added that the EFF would entail implications on the budget, therefore, the Fund input, indeed, would be needed. Aurangzeb said his priority would be that preliminary talks are held on a blueprint (actions to be taken under the EFF) but the actual talks will be held with the Fund during the spring meeting.

He said inflation is a big issue but sounded optimistic that after the recent inflation number, the SBP policy rate would decrease in the near future.

He said the GDP growth path is through macroeconomic stability and therefore, the EFF is important for the country to achieve sustained macroeconomic stability. The IMF staff mission is arriving in Pakistan to hold talks with Pakistani authorities initially from March 14-18 and may be extended till March 21.

He said the ongoing fiscal year has been much better as opposed to the previous year and now there is a need to be in implementation mode to fix the structural problem of the economy. He said the first priority would be to plug leakages in the Federal Board of Revenue (FBR) through end-to-end digitisation as this would bring about transparency. He added that plugging leakages would create fiscal space for the government, adding that the tax-to-GDP has to be improved to double digits and this could be made possible by using technology. The finance minister emphasised that the tax-to-GDP ratio can be increased by the available data after analysis.

In response to a question, he said wholesale, real estate, and agriculture are taxable sectors as how long the country would rely on taxes such as super tax.

He said the spade work has been done to a great extent with regard to implementation mode and the designer and partners have already been finalised.

He said Pakistan’s commercial inflows would materialise post extended fund facility as well as additional bilateral as the country has to move from deposits and rollovers. He further stated that on the external side, the role of the Special Investment Facilitation Council (SIFC) would be of importance to bring in investment as even friendly countries now want equity investment.

He said that fixing SOEs would also be important and the government’s priority would be to complete the transaction of Pakistan International Airlines (PIA) by the end of the ongoing fiscal year and added that “the government has no business to be in the business.”

He said the government would undertake the Public Sector Development Programme (PSDP) through public-private partnership while adding that Sindh has used, very effectively, the PSDP in public-private partnership.

Copyright Business Recorder, 2024