The policy level discussion, which began on Tuesday between Pakistan and the visiting International Monetary Fund (IMF) Mission, would focus on revenue collection, circular debt and privatization process.
A participant of the meeting on condition of anonymity said that there is considerable shortfall in revenue collection during the first four months of the current fiscal year. He added that FBR revenue collection target of Rs 5.5 trillion is based on projection of Rs 4,150 billion for the last fiscal year; however, the actual collection was Rs 3,830 billion which means that the base of FBR tax collection target was affected by Rs 318 billion from the day one.
The country's authorities now want the IMF to adjust Rs 320 billion erosion in the base and allow a downward revision in FBR target for the current fiscal year.
A senior official said that the additionally, the impact of import compression policy on FBR collection is greater than envisaged and the government's policy to deal with the challenge of current account deficit by contracting imports is having a significant impact on FBR tax collection.
The FBR is said to have informed that revenue during the first quarter has grown by 16 percent with addition revenue of Rs 131 billion over the first quarter of the last fiscal year.
Power sector circular debt, according to the participant, would be another area of focus during the policy level discussion and the power sector would satisfy the staff mission over considerable decline in flow of circular debt. The policy level discussion would also focus on the privatization process as these two areas have been making a major hole in fiscal side.
However, the government side appears confident about the successful completion of the first quarterly review of $6 billion Extended Fund Facility (EFF) for disbursement of second installment.
The government's major achievement has been on external side with considerable contraction in the current account deficit subsequent to a slash in import bill. An official of Finance Ministry claimed that despite a Rs 108 billion shortfall in revenue collection of the FBR, fiscal deficit target was on track. The official claimed that Finance Ministry has been able to mange fiscal deficit within the target by reducing expenditure; however, the claim was not verifiable as consolidated fiscal operation for the first quarter is yet to be released.
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