No relaxation, no waivers as IMF concludes review – Newspaper

ISLAMABAD: Concluding the first quarterly review on a successful note, the International Monetary Fund (IMF) has asked the government to definitely achieve the revenue objective, maintain a limit on the issuance of new guarantees and effectively implement the circular strategy of debt reduction.

"The conversations with the visiting mission have been very successful," said a senior government official. Dawn adding that "the government did not request an exemption, it was not necessary."

The IMF country representative in Islamabad, Teresa Daban Sánchez, declined to comment when approached.

According to the official, the mission also appreciated the political orientation of the State Bank and wanted to continue in the short and medium term. On top of that, he wanted the government to play a more proactive role in ensuring the independence of the central bank through legal instruments.

Responding to a question, he said that the IMF called on the government to avoid any tax exemption and take decisive action towards "harmonizing taxes and eliminating distortions" at the federal and provincial levels. He said that neither the fiscal objective was reviewed nor the requested or required exemptions.

He tells the government to meet the income objective, reduce the circular debt

The Fund also wanted further progress in the implementation of the Public Finance Administration Law and noted that there were still public funds outside the single treasury account that should be eliminated as soon as possible. This will add even more to the fiscal cushion, since all public funds would remain in a single account, providing greater maneuverability to the government.

The official said the talks had been completed despite the fact that on Friday before the mission's departure a formal settlement session would be held with financial advisor Dr. Hafeez Shaikh. He continued that the mission appreciated the progress in the implementation of the program so far, but emphasized that there was no room for complacency in any of the key areas in the future.

He said the IMF also called for strict adherence to the government guarantee limit worth Rs 1.6 trillion and discussed various options with the ministries of finance and power in relation to tariff issues. The fine print of these options would be part of the staff report and could be made public as part of the final statements that expire on Friday.

According to reports, the mission also insisted on keeping track of the fiscal discipline that had generated dividends in the first quarter of this year, as the fiscal deficit was reduced to 0.7{7be40b84a6a43fc4fae13304fce9a2695859798abfc41afd127b9f8b21c5f9c5} of GDP compared to 1.4{7be40b84a6a43fc4fae13304fce9a2695859798abfc41afd127b9f8b21c5f9c5} from the same quarter last year. Some ideas were also discussed on the adjustment of regulatory tariffs on various import items. There will be some increases in tariffs on non-essential imports and a reduction in those related to raw materials and industrial requirements in priority areas.

He said that better non-tax revenues compared to FBR revenues below the targets and that the reserve money reserved for SBP the previous fiscal year had helped the primary account remain at a surplus close to Rs290 billion in the first quarter of This fiscal year.

The authorities expect the disbursement of the second tranche of approximately $ 453 million in December this year as a result of the completion of the first quarterly review. Pakistan had already received around $ 995 million in July of the total program of $ 6 billion by completing all previous actions committed by the country before signing the fund program.

The government was advised to strengthen coordination at the federal and provincial levels for greater fiscal and economic calibration and tax harmonization.

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 stock of net foreign currency swaps and the term position, primary budget deficit, no government loans from the central bank and a ban on government guarantees.

In addition, there are two criteria for continuous performance that include zero new credits to the government by 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 from the Benazir Income Support Program, government spending on health and education, tax collection, payment of tax refunds and the freezing of the circular debt of the electricity sector.

Published on Dawn, November 8, 2019



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