A 10-day long International Monetary Fund's (IMF) review of Pakistan's economy has concluded here at a positive note as its visiting mission has finally shown willingness to take Islamabad's case to its board of directors (BoDs) for at least one tranche of $1.7 billion of $11.3 billion standby arrangement (SBA) probably in the first week of December.
Sources said the formal talks between IMF and Pakistan for quarterly review have concluded here on Friday evening and the visiting mission is flying back to Washington on Tuesday evening soon after the 2- day Pakistan Development Forum (PDF) starting here on Monday (tomorrow).
The mission had dictated a number of measures to Pakistani side at the start of quarterly review such as presenting the proposed bill to impose one time flood tax and reformed general sales tax (RGST) and made clear to the policy-makers that Islamabad will not get any concession from the fund unless it gives up its policy of dishonouring commitments to secure the next tranche under SBA facility. Left with very fiscal space to keep the ball rolling for fulfilling financial commitments such as debt servicing and rising inflation, the government had to come up quickly to the demands of the fund and presented two crucial bills in parliament - flood tax and RGST.
A government official who was the member of Pakistani team negotiating with the visiting mission told Business Recorder on Saturday that the IMF mission was leaving Pakistan with a better understanding with Pakistani side after its a series of actions to fulfil its commitment attached to SBA facility qualifies for the next tranche.
He, in particular, mentioned presenting of reformed general sales tax (RGST) bill in parliament as a major development to give it a strong message that Pakistan was taking several difficult decisions to reform key sectors of its economy. The proposed flood tax has also been seen by the visiting mission as a big leap forward by Pakistan to mobilise its indigenous resources to generate more revenue to spend for much needed reconstruction and development projects in flood- damaged areas in Pakistan, the official claimed.
Two instalments, each $1.7 billion, are due to Pakistan from IMF by December and Pakistan has been demanding of the fund to release both of them in one go to build up its foreign exchange reserves, besides getting more space to plug in the widening budgetary deficit.
After quarterly review, the officials in Islamabad are hopeful that the IMF mission was convinced that Pakistan was moving in the right direction to reform its much needed taxation and energy sector and it should be given financial support by the fund to help meet its financial requirement in the post-flood situation. He claimed that the mission had a positive change in approach towards Pakistan that worked to show its willingness to Pakistan to present its case to BoDs for the next tranche in the first week of December.
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