ISLAMABAD: Negotiations on the implementation timing of politically challenging structural benchmarks particularly power sector reforms, tax reforms and amendments to Nepra and SBP acts are underway with the International Monetary Fund (IMF).
This was stated by a newly appointed senior spokesman in the Ministry of Finance Kamran Ali Afzal, during a brief interaction with select best reporters. The release of second tranche under the $6 billion Extended Fund Facility (EFF) remains at risk till an agreement on the second quarterly mandatory review is reached with the IMF.
The spokesman further acknowledged that amendments to National Electric Power Regulatory Authority (NEPRA) and State Bank of Pakistan (SBP) Acts may be prior actions for revival of the IMF programme adding that a missed structural benchmark becomes prior action unless a waiver is given by the Fund.
He further maintained that power sector subsidies and mobilization of taxes, notwithstanding an increase in spite of Covid-19, would be other areas of concern for the government during negotiations with not only IMF but also with other development partners. The special spokesman further stated that all the development partners - IMF, World Bank and Asian Development Bank – have problems with untargeted subsides and have been asking the country to formulate a plan to ensure that subsides are provided to the needful.
He also maintained that the IMF has been very supportive of Pakistan’s reform agenda and Pakistan has been sharing data with the Fund on a daily basis or twice a day and advisory meetings are also being held on power sector to provide targeted subsidies.
The development partners have frontloaded their assistance in the pipeline for Pakistan in the wake of Covid-19 and now the country is on track with respect to board meeting of the Asian Development Bank (ADB) that would consider $300 million trade and competitiveness sub-programme-II for Pakistan, the senior spokesman said.
Although, we are moving towards an agreement, the second wave of Covid-19 has made things difficult, the official said adding that there was considerable increase in cement and steel sales as well as growth in LSM with positive signs of recovery, yet nothing can be predicted with regard to growth in terms of GDP, he stated.
In reply to a question wither the country would take commercial loans to support the foreign exchange reserves, he said there is an understanding that quantum of commercial loans would not increase from the current level.
Copyright Business Recorder, 2020