Staff-level mission date not finalised: IMF wants required adjustments

ISLAMABAD: The International Monetary Fund (IMF) Staff Mission is expected in Islamabad by the end of the ongoing month but the date has not yet been finalised as the Fund wanted Pakistan to first make the required adjustments.

An official, on condition of anonymity, said after the National Assembly’s Standing Committee on Finance meeting on Tuesday it was surfaced that future revenue collection is expected to witness a decrease consequent to a decline in growth and variation of other economic variables following floods and expenditure is likely to increase.

The official said that negotiations with the IMF are being held on a daily basis through video link and there is no veracity in reports of introducing new taxes on the demand of the IMF. He said that the political situation in the country is also one of the factors for the delay in fielding a staff-level mission by the IMF.

However, he acknowledged that the IMF has been pressing for an increase in the tax-to-GDP ratio. He said that the ninth review talks with the IMF are likely to continue for five days as the process of sharing economic data is being done on a regular basis. After the devastating floods, the country has requested the Fund for relief or waiver in the budget deficit ceiling.

Earlier, during a briefing to the committee meeting presided over by Qaiser Ahmed Shaikh, Dr Aisha Ghaus Pasha said whether Pakistan’s request about waiver would be accepted or not, it is the decision that is a prerogative of the IMF Executive Board meeting. Staff-level mission would only submit its report to the Executive Board and a final decision would be taken by it.

9th IMF review: Framework yet to be finalized

The minister informed the committee that 54 important meetings were held including high-level meetings with the IMF and the World Bank, the ADB, and other bilaterals during the annual meeting of the WB and IMF in Washington. She said that the ADB was also requested for repurposing of the funds towards reconstruction and rehabilitation of the floods areas.

“We informed them about the damage caused by the flood situation in the country and wanted the world should pay compensation to Pakistan.”

About nine million more people would go below the poverty line due to the floods, the minister added.

She added that the economic framework and indicators have been affected and required to be revisited as GDP growth has decreased by two percent besides inflation and other economic variables and Pakistan is expecting global funding in reconstruction and rehabilitation of the flood victims.

She said that the IMF was also briefed on economic framework, as well as, on revenue as how it would be impacted after the decrease in the GDP growth consequent to floods and impact on other economic variables.

The minister said that the government expenses have increased due to floods as Rs120 billion were spent on providing immediate relief to the victims.

Aisha Pasha gave details of the inflows expected from the World Bank, the ADB and other bilaterals, etc, and added that the UN is playing its role to pay compensation for climate change-caused damage to Pakistan.

She said that the government has also announced a relief package for the farmers due to damages agriculture sector suffered following floods.

MNA Nafisa Shah suggested that people are in need of money at this point in time as wheat sowing season has started. She said that the government should be specific as what would be available to the farmers and at what place.

MNA Barjees Tahir said that the value of dollar has been increasing despite Finance Minister Ishaq Dar’s claim that it would be brought down to Rs200 per dollar and the committee wanted to know whether there is any prospect of a decline in inflation. He said that there are indications of further increase in electricity and petrol prices by the government on the instructions of the IMF and what about inflation, it is out of control and is impacting everyone. He wanted to know how it would be tamed down by the economic team.

Nafisa Shah of Pakistan People’s Party alleged the FBR of harassing taxpayers and stated that all the funds of her hometown municipality, Khairpur, have been frozen, and this was not specific to Khairpur alone; similar reports are also coming from other municipalities, as well. “FBR has frozen the account of Municipal Committee Khairpur, and salaries of MCs employees of disaster-affected area are being withheld,” she deplored. The committee directed the FBR to resolve the matter at the earliest.

Copyright Business Recorder, 2022