ISLAMABAD: The Ministry of Finance has barred all ministries/ Divisions from submitting any summary to the Federal Cabinet and the committees contrary to commitments made with the International Monetary Fund (IMF), well-informed sources told Business Recorder.
This message was conveyed by Secretary Finance, Imdadullah Bosal to all Secretaries/ Additional Secretaries Incharge of Ministries, weeks before arrival of the IMF team for second review of the Stand-By Arrangement (SBA).
The second review is scheduled to be held in February 2024; therefore, it is critical that all commitments including Structural Benchmarks, Quantitative Performance Criteria, Indicative Targets and other commitments related to 2nd Quarter are met as agreed with the IMF, the sources quoted Secretary Finance as saying.
IMF Executive Board completes 1st review under SBA: finance ministry
According to the press release issued by the IMF of January 11, 2024 after its Executive Board completed the First Review of the Stand-By Arrangement (SBA) for Pakistan, the program is focused on implementation of FY 24 budget to facilitate Pakistan’s needed fiscal adjustment, and on achieving further progress on structural reforms, particularly with regard to energy sector viability.
Secretary Finance noted that Pakistan is currently under a SBA with the IMF wherein a number of commitments have been made to achieve macroeconomic stability. These commitments are fundamental to keeping the program on track and achieving fiscal targets under the SBA.
In this regard, he said that, the Government has committed: (i) not to allow supplementary grants for any unbudgeted spending, including Federal Grants, over the parliamentary approved levels in FY 2023-24 until the formation of a new government after the elections; (ii) avoid the practice of issuing new preferential tax treatments or exemptions; (iii) commit not to grant further tax amnesties; and (iv) commit not to introduce any subsidy or cross-subsidy scheme, in FY 24 and beyond.
According to Secretary Finance, the commitments are critical for achieving program targets, therefore, all the secretaries/additional secretaries in-charge who are also Principal Accounting Officers (PAOs) of Ministries have been requested to ensure that proposals in contravention of these commitments are not submitted before competent fora such as Federal Cabinet and its committees, Central Development Working Party (CDWP), Executive Committee of National Economic Council (ECNEC), etc.
He further asked all the Principal Accounting Officers of Ministries that the commitments with the IMF may be brought to the notice of institutions/autonomous bodies and organizations under the administrative control of their ministry/Division to ensure compliance.
The Authorities had also apprised the IMF that they have started to accelerate various programmed structural reforms with the help of the World Bank, ADB, and other donors (supported through well-prioritised and complementary conditionality in their programs) that are aimed at reducing commercial and technical losses, improving governance and PPA terms, increasing competition and reducing generation costs and greening the energy mix in FY24.
The source said the government may seek IMF approval on its proposed tariff rationalization plan meant to reduce electricity tariff to cents 9/kWh from cents 14/kWh, through withdrawal of cross subsidies of Rs 240 billion.
Copyright Business Recorder, 2024
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