Pakistan economy has been set in the right direction, however its sustainability is contingent on the continuation of reforms as well as building on the gains achieved. This was stated by the IMF resident representative to Pakistan Tokhir Mirzoev during a chat with a select-group of media persons Wednesday. Mirzoev highlighted the gains of $6.64 billion Extended Fund Facility (EFF) programme and tried to dispel the growing perception that the Fund gave a large number of waivers on structural benchmarks and performance criteria to ensure timely completion of the programme.
He maintained that giving waivers is not an issue as long as these aid in achieving targets and stated "the first review of the Fund set the economic targets where it wants the government to be by the end of the programme and as we approach the end of the programme we are on those targets." He stated that last year Pakistan was short of Rs 40 billion on revenue target and subsequently took required corrective measures.
Mirzoev identified the IMF achievements under the EFF notably to help Pakistan achieve macroeconomic stability, improve fiscal situation, increase tax revenue as well as policy reforms with respect to independence of central bank especially on monetary policy.
He added that reforms on Benami law and Public Private Partnership (PPP) were also satisfactory and circular debt growth as well as load-shedding for industry and households have declined due to the EFF.
He stated that the most successful achievement under the EFF was a stop to the circular debt crisis and while flow of circular debt has not been eliminated yet it has slowed and consequently is not increasing. He said the stock of circular debt is stagnant and was Rs 321 billion in 2015-16. He said low oil prices in the international market may be one of the factors but not the sole factor for the slow increase in the flow of circular debt.
The IMF resident representative acknowledged that progress was unsatisfactory with respect to Public Sector Enterprises (PSEs) and business climate.
He said countries get into external crisis due to bad policies and some times borrow beyond their repayment capacity. Mirzoev maintained that Pakistan''''s position is much stronger given Pakistan''''s foreign exchange reserves and fiscal position which would provide a buffer against small shocks for some time.
"The government has taken various measures to bring non-filers into tax net although historically bringing people into tax next has been extremely challenging for Pakistani governments. Today non-filers are contributing to revenue and the purpose of withholding tax is two-fold - to bring non-filers into tax net as well as to collect more revenue," he added.
He said deposit protection bill may be the only prior condition for release of the last tranche but the IMF would be carrying out post programme monitoring (PPM), a diagnostic assessment of economic conditions, twice a year.
Mirzoev said the duration of the PPM has yet to be discussed and a report would be issued after completion of the PPM. He said in a letter of comfort, the IMF provides only its assessment of the economic situation and it is up to other donors whether they follow it or not. He said the IMF relies on official data released by Pakistan Bureau of Statistics (PBS).