Policy talks begin with IMF – Newspaper

ISLAMABAD: Pakistan and the mission of the visiting staff of the International Monetary Fund (IMF) on Monday initiated policy-level talks for the disbursement of the second tranche of approximately $ 453 million at the beginning of next month under the $ 6 billion Fund. Extended Fund (FEP) completed in May of this year.

A senior government official said Dawn that Secretary of Finance Naveed Kamran Baloch and the Governor of the State Bank of Pakistan (SBP), Dr. Reza Baqir, initiated policy discussions with the fund led by their Chief of Mission in Pakistan, Ernesto Ramírez-Rigo. The Prime Minister on Finance and Revenue, Dr. Abdul Hafeez Shaikh, is expected to join the negotiations on Wednesday (November 6) for the final round, he added.

The sources said that the place of the negotiations was moved outside the Ministry of Finance to a local hotel where the mission members were staying due to a warning to the staff's mission. Both parties could not meet with the media and said they would contact the press at the end of the talks.

The sources said that the authorities were confident of the successful completion of the first quarterly review of the fund's program, which would lead to the disbursement of the second tranche in December. They said that the current account had responded to the steps introduced by the Ministry of Finance and the central bank more than expected, while the objectives of the fiscal account for the first quarter had also been met.

It was reported that budget savings of Rs50bn had been achieved in the first quarter of the fiscal year through strict control of additional supplementary subsidies, while savings of Rs9bn were reported due to control over current expenditures. The sources said that the Rs113bn landslides on the income side were partially met through these savings and better recoveries because of non-tax revenues.

There were some concerns about the pace of expansion in the income deficit and the authorities suggested that additional and corrective measures be taken to achieve the goals of the end of December. The discussions also took place on the adjustments on the income side.

The IMF had disbursed around $ 991 million in July this year by completing all previous actions committed by Pakistan before signing the fund's program. The two sides have been in discussions at a technical level since October 28 for the exchange of the latest data related to all ministries of economy and their entities.

The IMF team advised the government last week to strengthen cooperation at the federal and provincial levels for greater fiscal and economic coordination, and asked federal and provincial authorities to take full advantage of development allocations to revive growth.

Authorities in Islamabad said they were comfortable with the overall progress in the fund's program in the first quarter as their income deficit had been more than offset by non-tax revenues in excess of estimates backed by the licensing fees provided by the telecommunications companies

Under the fund's program, the government must meet six performance criteria, including those related to net international reserves, the net assets of the central bank, the SBP stock of foreign currency swaps and the term position, primary budget deficit , no central bank government loan and a ban on government guarantees.

In addition, there are two criteria for continuous performance that include zero new credits to the government by the SBP and the accumulation of arrears in external public payments. In addition to that, the performance of the authorities is also reviewed in five indicative objectives, including disbursements under BISP, government expenditure on health and education, tax collection, payment of tax refunds and a freeze on the circular debt of the electricity sector .

Published on Dawn, November 5, 2019