Final round of talks with IMF: Govt to strive for as much fiscal space as possible

ISLAMABAD: The government’s economic team led by finance minister Shaukat Tarin will hold the final round of talks with the International Monetary Fund (IMF) to bring budgetary measures under the Extended Fund Facility (EFF) scope.

An official on condition of anonymity said that details to this effect cannot be shared at this point in time and added that the finance minister would try to get as much as fiscal space is possible from the Fund. He said that the power sector is likely to dominate the talks and finance minister would present an alternative plan to the IMF to deal with the circular debt instead of increasing power tariff. Sources said the power sector appears to be the main stumbling block in reaching an understanding with the IMF even though the government was confident that it would be able to convince the IMF on its alternative plan – limit the flow of circular debt by stretching out capacity payments and recent payments to the IPPs is part of the plan and to clear the old stock – instead of increasing power tariffs.

When contacted, IMF resident representative Teresa Dabán Sanchez stated that the IMF team and the Pakistani authorities remain engaged in technical meetings on the 6th review under the EFF. There are no envisaged interactions with the press during these meetings and discussions, she added.

Tarin’s predecessor, Dr Hafeez Sheikh, had agreed to Rs 5.9 trillion FBR target for next year while Shaukat Tarin has publicly stated that the government will increase revenue by one trillion rupees in the next fiscal year – a target that would be acceptable to the IMF if the current year’s target of between Rs 4.7 to 4.8 trillion is achieved.

Special Assistant to Prime Minister Dr Waqar Masood Khan recently informed a parliamentary panel that discussions with the IMF were under way on budget and nothing has been finalized yet. However, he was optimistic that an understanding would be reached with the IMF on power sector.

Finance Minister Shaukat, soon after assuming the office, ruled out any increase in power tariff and stated that prime minister Imran Khan was also against the increase primarily because electricity in the country has become very expensive and people could no longer afford it besides it was also making the industry uncompetitive.

Copyright Business Recorder, 2021