Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF) expects a deal on the ongoing first review of Stand-By-Arrangement (SBA) ‘within this week’.
“I expect an agreement on the review to come within this week,” said Georgieva in an interview with Bloomberg TV’s Haslinda Amin on Wednesday.
The remarks come as an IMF mission, led by Nathan Porter, is visiting Pakistan for the first review of the SBA.
The South Asian nation is operating under a caretaker government after an IMF loan programme, approved in July, helped avert a sovereign debt default. Under the $3 billion SBA, Pakistan received $1.2 billion from the IMF as the first tranche in July.
Talking to Bloomberg TV, the IMF chief praised the Pakistani authorities for pursuing the IMF program despite difficult circumstances.
“Pakistani authorities and the Caretaker Finance Minister deserve credit for sticking to the program that they have in a very difficult time,” she said.
Georgieva termed lower tax collection as the “parental issue” of Pakistan, as the country tax-to-GDP ratio remains at 12%. “We are saying it has to be at least 15% to have the revenues to sustain the functioning of Pakistan,” she said while urging authorities to collect taxes that can pay them.
On Monday, Caretaker Finance Minister Dr Shamshad Akhtar began policy-level talks with the visiting staff mission of the IMF, which is being led by Nathan Porter.
The governor State Bank (SBP), the chairman Federal Board of Revenue (FBR) as well as other senior officials of the Ministry of Finance, the FBR, the SBP and the Ministry of Energy also attended the meeting.
An official, privy with the talks, told Business Recorder that so far, talks have been progressing according to expectations, however, some issues that emerged during the technical level talks would be discussed during the policy level talks.
He added that two sessions of talks have been held on Monday with one in the morning and one in the evening. In reply to a question about whether any new taxes have been proposed, they added that at this point in time, the FBR tax collection is slightly above target.
However, about external financing, another official said the Fund might have raised some questions.
Pakistan has fulfilled all important conditions of the IMF for the first review, they maintained.
Israel-Hamas escalation
On the ongoing escalation between Israel and Hamas, Georgieva said that the war will have a negative impact on the regional economy.
“For Gaza, the economy is devastated, the (economy of) West Bank negatively impacted, (economy of) Israel negatively impacted,” she said.
“On a global scale, what we see is an immediate jump in the oil prices. That jump is a reflection of anxiety,” said the IMF chief.
She said that if the war persists but remains localized, the “likely impact on the rest of the world is likely to be minimal. But the longer it goes, the bigger is the risk of an accident and can have dramatic consequences”.